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How I paid off $20,000 in credit card debt without giving up my avocado toast

avocado toast on a plate
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avocado toast on a plate
Molly Aaker/Getty Images
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Considering most people don’t get taught about financial management in school, and likely not by their families either, it seems a lot of young adults get caught in a debt trap at some point.

Lexa VanDamme found herself in such a situation but says she managed to pay off more than $20,000 in credit card debt. She is still managing her student loan debt. Using online resources, this millennial started learning about budgeting and financing during the pandemic. That input helped her get out of credit card debt.

VanDamme now draws on her own experience to run the Avocado Toast Budget, a resource that provides input for others to manage their debt — without cutting back on the simple pleasures like, yes, avocado toast. “I wanted to create a community where people could come and talk about debt without any of the shame or the guilt around it,” she says.

VanDamme talked to Bankrate about how she managed her credit card debt.

headshot of lexa vandamme
Courtesy of Lexa VanDamme

How did you get into credit card debt?

When I look back on it, I think a lot of it is that I thought I sucked at managing money. I thought I was either just lazy or I couldn’t figure it out. But a lot of it was just trying to keep up with day-to-day expenses. I was getting my master’s degree (in psychology), working full-time. So I ate out a lot. And I would just end up spending money — without thinking about it — with impulse purchases. All of those things really add up. And they add up pretty quickly.

I had moved a couple of times to a different apartment and the job I had at the time was very unstable. My hours weren’t very consistent, so I thought it was impossible for me to budget. And with moving and all the expenses that come with that, I thought a lot of it was that. But I wasn’t quite sure because, honestly, I just tried to avoid my finances if at all possible.

How did you pay off the debt?

Learning how to budget and getting on a budgeting system that worked for me was one of the things that helped me the most. By March 2020, I was dealing with three different personal loans that were all originally credit card debt.

I racked up $6000 in credit card debt, took out a personal loan. I ended up racking up more debt and I did the second loan, and then ended up maxing out my credit card a third time. And that’s when I took out the third. But the first couple of times that I tried to refinance and pay it off, it didn’t work, because I didn’t know how to budget in a way that worked for me.

I’m very thankful for learning about a zero-based budget and having a system where I tracked all of my expenses and figured out what I wanted my money to do for me. I feel like that gave me the most control over my money. I was able to pay off my debt faster that way, because finally I felt like I knew where my money was going, whereas before I had no idea.

Explain how zero-based budgeting works.

You are giving every single dollar you have a purpose. I went through and listed out all of my bills, but also all of my variable expenses, things like groceries, gas and eating out. And savings. I knew I would probably move again and I wanted to be financially prepared for that — or getting a new car or going on a vacation. Every time I got paid, I went through and assigned all of the money I had to one of those categories. So I knew exactly what my money was doing for me.

And then, as I went through and tracked all of my expenses, I was able to keep up and say, “OK, maybe I overspent on eating out, but where is that money going to come from?” So I could make sure that I could still pay for rent and cover my phone bill and everything else that needs to get paid. Zero-based budgeting is one of the most hands-on budgeting methods, but if you are in a lot of debt or if you have a low income or high expenses, it is one of my favorites. I feel it gives you the most control over your money.

How do you make up for money spent on indulgences?

There’s only so much you can cut back, especially right now with how much gas and groceries cost. Try to find creative ways to either increase your income in little ways, through negotiating or through picking up a side hustle. I drove for DoorDash on the weekends whenever I wasn’t working or whenever I didn’t have a paper due. Just those little things, to be able to put a little bit more towards debt or the little extra things you want.

There may also be creative ways you can cut back on expenses. I think a phone call is really powerful. I have cut my internet bill and phone bill in half by just giving the company a call and asking if they had any other options. Being able to navigate those negotiations and find those little creative ways to cut back can really be helpful when you are on a tight budget, when you can’t make ends meet, because that happens.

You say there’s no financial freedom without reproductive freedom. Please explain.

Children and being pregnant is so expensive and can completely change your life, whether you decide to keep the child or whatever direction you end up going. Not being able to make that choice means that you not only don’t have your reproductive freedom, but you don’t have the financial freedom to be able to make choices either.

I think we need to be having conversations about how financially destructive things like Roe v. Wade getting overturned — and some of those bigger government decisions — can be on our individual lives, on people’s freedom to feel confident with money and able to navigate the world that we live in.

Do you think debt is always a bad thing?

I don’t think that debt is inherently bad, especially when we are talking about things like student loans or home ownership that have low interest and can add a lot of value to people’s lives. Sometimes the emphasis is so much on being debt-free, we forget that, especially [wealthier] people or people who own their companies, they are leveraging debt all the time. But with them it’s called “leverage,” whereas with a lot of us in the middle class or lower classes, it’s called “debt,” and it’s looked at as a bad thing.

What’s your advice for people paying down credit card debt?

You are not alone in that even if no one else is talking about it, other people are struggling with the same things you are. Or at least struggling with being in debt, trying to figure out their finances.

I have a saying on my channel: Debt is morally neutral. And that basically means you are not a bad person for being in debt. Your debt is not reflective of how good you are with money or the kind of person you are. I think being able to let go of some of that shame and guilt is often the first step toward being able to start tackling your finances and feeling more confident with money. It’s something a lot of us really struggle with.

Written by
Poonkulali Thangavelu
Senior Reporter
Poonkulali Thangavelu is a senior writer and columnist at CreditCards.com and Bankrate, addressing debt and credit card-related legal and regulatory issues.
Edited by
Senior Editor