When the Momentum Method doesn't apply

Written by
Peter Dunn


I'm 24 years old and lost both of my parent 2 years ago. I went into a deep depression and I racked up $10,000 of credit card debt. I have poor credit and a maxed out chase credit card with $10,000. My current interest rate is about 20%. I'm having difficulty figuring out my best option to pay this off. I have attempted to contact chase to discuss a lower rate but they wouldn't budge. What's my best plan?

I didn't catch your name, so I'm going to have to guess at your gender and name. Fella? Let's go with fella.

There's a lot here in your short email. First of all, let me say, my condolences on the loss of your parents. Losing both parents at such a young age is unthinkable. It also makes perfect sense why you racked up so much credit card debt.

Grief and depression do strange things to people. And actually, money and mental health often cross paths. Not only is there the cost of the mental health care, but then there is the picking up of the financial pieces left behind during a rough time. But I won't get into all that now, you need advice on how to move forward.

Your biggest and most important obstacle you'll need to overcome as soon as possible is to change your lifestyle. One doesn't rack up 10k on a credit card without getting used to spending a certain amount per month. You need to adjust to living off of less. This isn't easy, but you have to do it.

Here's the tricky thing with your debt, it isn't a typical debt situation. Most people have debt spread out over multiple cards or lines of credit, which is why I always recommend the Momentum Method. The Momentum Method uses the momentum created by paying off smaller bills first to motivate you to pay off the bigger bills. But this method won't work for you because you only have one big bill. This limits you to the basic debt pay off options: Spend less or earn more.

You didn't mention how much you make, but based on your age alone I would guess you aren't bringing in the big bucks. This is totally okay, but it also means finding the money to pay off your credit card from your income will be more difficult. Rent and transportation and food all account for a certain percentage of your income and I would guess that even if you made a lot of smart choices and cut a lot of expenses you would still only be able to pull $200-$300 from your income. This leads to your best option...

You need to get a second job. I understand, no one wants to get a second job, but with this amount of credit card debt you really don't have a choice. If it helps, the second job situation is only temporary. By diverting your second stream of income directly into credit card payments you should be able to pay off the card in 12-18 months. The added bonus is you'll have effectively cured your overspending habits and learned to live on less.

You've been through a tough spot, and there is more hard work ahead of you, but you can get back on your feet. It's also worth noting you have time on your side. You are still young, and if you do your due diligence you'll have this paid off before you see 26.

Oh and in case you missed it, I also answered your question on The Pete the Planner Radio Show this weekend. You can listen to the clip here:

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