Here’s what nobody told you about credit card debt: the interest doesn’t hit once a month.
It hits every single day. On yesterday’s interest. That one detail explains why your balance never seems to go down — and why it’s not your fault.
In this edition of Study Hall, I’m compiling all of our best credit card debt advice into one place so you can stop Googling in a shame spiral at 2 a.m. and actually understand what’s going on with your debt. I’m breaking down how interest really works (and why credit card debt is uniquely expensive), walking you through step-by-step payoff strategies, including the avalanche method, the Debt Free Guys’ lasso method, and using personal loans to consolidate, and I’m finishing with some real talk about why shame is the worst debt payoff strategy on the planet. If you’re carrying credit card debt and you feel stuck, overwhelmed, or like it’s somehow your fault: this episode is your starting line.
Key takeaways:
Credit card interest is a triple threat
Your credit card interest rate is high (22–30%), it compounds daily (not monthly, not yearly — daily), and it compounds on itself. That means every day you carry a balance, your interest is earning interest on yesterday’s interest. This is why credit card debt feels so impossible to escape. It’s not a willpower problem, it’s math. And the math is designed to keep you paying.
Pay toward the principal, not just the balance
When you send extra money to a loan, it doesn’t always go where you think it does. Tori’s Toyota car loan story is a perfect example: her extra $50 just reduced next month’s bill instead of lowering the actual principal. She had to call and ask for a P.O. Box in Iowa to send principal-only payments. Companies don’t advertise this option because keeping you in debt longer makes them more money. Call and ask.
The avalanche method saves you the most money
List your debts from highest interest rate to lowest. Make minimum payments on everything, then throw every extra dollar at the highest-interest debt first. It doesn’t matter if your student loan balance is bigger — if your credit card interest rate is higher, that’s what’s costing you the most. Kill the most expensive debt first.
The lasso method can fast-track your payoff
The Debt Free Guys paid off $51,000 in credit card debt using what they call the Debt Lasso Method: transfer your balances to 0% interest cards, commit to a fixed monthly payment amount, automate everything, and monitor once a month. The key is having a real plan — a balance transfer without a payoff commitment is just kicking the can down the road.
Personal loans make credit card debt cheaper and more manageable
A personal loan lets you combine multiple credit card debts into one fixed monthly payment at a lower interest rate — and crucially, the interest is simple, not compounding. People in the HFK community who’ve done this say they finally feel like they can breathe. But a personal loan is not a magic eraser. You still need a plan, changed habits, and an emergency fund. It’s a tool, not an escape hatch.
Shame is the worst debt payoff strategy. Set a goal and stick to it
Debt feels like a personal failing. It’s not. Shame closes tabs, stops questions, and delays action. Instead of tough love, set goals that are specific, timely, and mission-driven. And here’s the hack: write them in past tense. “It feels so good to be in 2026 and not have credit card debt anymore.” Convince your brain you’ve already done it, and you’ll actually do it.
Notable quotes
“Nothing is going to change in your life unless you change it.”
“Psychologically, shame is the worst teacher and tool for accomplishing our goals.”
“Tough love is not a real thing. You do not need to be condescended to in order to get out of debt.”
Episode at-a-glance
00:00 What makes up debt?
01:00 How credit card interest actually works
04:00 Why credit card debt compounds into a “slippery slope”
05:30 Paying down the principal to reduce total cost
06:30 Getting your debt payoff plan together
07:00 Step-by-step: list debts, calculate payments, find extra
08:30 The avalanche method explained
09:30 Tori’s Toyota story: paying toward principal
12:00 The Debt Lasso Method with the Debt Free Guys
16:00 Why balance transfers only work with a real plan
18:30 Personal loans: what they are and why they work
22:00 Simple interest vs. compound interest for debt
23:00 Things to consider before getting a personal loan
25:00 When personal loans are NOT the right move
28:00 What personal loans should NOT be used for
29:00 Debt settlement and your rights as a consumer with Leslie Tayne, Esq.
31:00 The Fair Debt Collection Practices Act
33:00 Tori’s closing pep talk: debt is not a personal failing
35:00 Goal-setting hack: specific, timely, and mission-driven
37:00 Writing goals in past tense — the visualization hack
Thanks to Rocket Money for sponsoring this episode!
Thanks to BetterHelp for sponsoring this episode!
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Transcript:
Tori Dunlap:
In this episode all about debt, we are breaking down what debt actually is, how to pay it off and how to stay out of debt for good. I’m also talking about the key tool that has helped thousands of women in our community pay off their debt faster and in a way that doesn’t make them hate their life. Welcome to Study Hall: Debt Edition. This is an episode format we use to compile all of our great advice around one particular topic from a variety of different episodes, so you’re getting all of the best advice all in one place.
Now, we have tons of episodes on credit cards and how to use them responsibly, how to travel for free using your credit card. We’re not talking about that today. You can subscribe to the podcast or if you’re watching on YouTube for more content around that. We are just talking about credit card debt today. First up, we’re kicking off with a clip from a solo episode I did a few months ago breaking down some common terminology to make sure you understand your debt. Let’s dive in after a quick word from our sponsors.
Debt is made up of two basic components. The first is the principal. That is the original amount of money that you took out. If you get a student loan, for example, and that student loan is $30,000, that is the principal. If you put $1,000 on a credit card and you do not pay it off, that is the principal. The principal is the original amount of money that you took out as a loan or took out in debt. The second component of debt is what’s called interest, because they’re not just going to give you this amount of money for free. They’re asking for an exchange for this lending of money; they’re going to charge you interest on top. Now, this is the part that most people don’t fully understand is that if you put $1,000 on a credit card, for instance, that interest is going to accumulate in a different way than your interest on a student loan or your interest on a car loan or a mortgage or something else.
There’s three basic components of interest. First is the rate of the interest. Your average student loan is anywhere from 4% to 7%. We’re seeing more on the 7% as of this recording. But the average credit card interest rate is 22% and it caps at about 30%. That’s a lot more expensive. There’s some debt like mortgages, student loans that have lower interest rates. It still seems overwhelming, of course. It makes the debt seem less overwhelming, or at least it’s more manageable because that interest rate isn’t as high. But when it comes to credit cards, that interest rate being 18%, 20%, 25%, 30% is really, really high. And that interest rate is getting charged for any type of loan against that principal because that is the cost of getting that loan. That’s the cost of getting that money.
The second thing you need to think about when it comes to interest is how this interest is accruing. What is the rate that this interest accrues at? For some loans, this interest is every year. For some loans, like credit cards, this interest applies every single day. Your interest is not just applied once a month, once a year, every single day that you owe a credit card company money, you are going to pay interest.
And finally, you need to understand how the interest accrues; not just what the interest rate is, when it happens, but also how often it happens. There’s some debt, usually a mortgage, for example, that has what’s called simple interest. Simple interest mean, for easy math, $1,000, 10% interest, you’re only paying $100. But compound interest is where debt starts to get really, really sticky. Compound interest, just like compound interest with investing, which is positive, it accrues every single time. It could be great if you’re investing, which means your interest is earning interest is earning interest, but if you have debt that is compounding interest, that is a fucking slippery slope because your interest is earning interest is earning interest. The best part, and I mean best as sarcastically as possible here, about credit cards is that the interest is high. It’s a high interest rate. It is a daily interest rate and it’s compounding. Every single day your interest earns interest on yesterday’s interest. Take a shot every time I say interest. But you get it.
Now, I’m saying this to you not to freak you out, not to scare you, not to shame you, but because you might not understand that this is what’s going on. In fact, again, back to the research I did from my book, most people don’t, most women don’t. We have to start understanding why credit card debt can be so dangerous and also why it feels so insurmountable. Because it’s not just interest getting charged once a year, it is interest getting charged every single day that earns interest off of yesterday’s interest, and it’s a really, really high rate.
One of the things I talk about with paying off any kind of debt, and we have a whole chapter in my book about paying off debt, is that if we can pay down the principal, you’re going to spend less money in interest. If we can pay down, let’s say that original $1,000 that we put on a credit card, well, then we’re not getting charged as much interest. The interest doesn’t have the ability to accrue it the same way or in the same way so that your overall balance gets to go down.
One of the tips I have in my book, and we have a whole script on how you can do this, is calling whoever your debt is through, whoever your debt provider is through, and seeing if you can apply additional payments just to the principal. If you can lower the principal, that means you’re paying less debt overall. However, a lot of credit cards don’t let you do this. They don’t let you just pay to the principal, and especially not your monthly or your minimum payment. That’s going to the general pot; that’s going to your principal and your interest. This is another reason why credit card debt can be so, so dangerous and also feel really, really overwhelming.
Now that we’ve got that covered, let’s talk about how to get a debt payoff plan together. And this includes a step-by-step breakdown of exactly how to start. Take it away, past me.
How do we actually work to pay it off? Well, one, we’re going to write out all of our debts from our highest interest rate to our lowest interest rate. If you don’t know your balance, if you don’t know your interest rate, this is where we start. Do some phone calls, call your credit card company, log into your student loan portal. This will likely be uncomfortable. It’s okay. It’s okay that it feels uncomfortable, but we can’t get a plan together unless we actually know what’s going on. First we’re going to figure out how much debt do we have? Where is it? And what is the interest rate? What is the balance? And we’re listing it from highest interest to lowest interest.
We want to figure out next our total debt payments per month. Are you sending $400 to your student loans plus maybe $1,000 for your mortgage? Where are you living, by the way? Because I would love to move there. Plus let’s say you have a credit card debt payment. We’re going to write out what our total debt payments are per month. And then number three, we’re going to look at our budget. Previous episode, we started putting a budget together. We’re going to look at what we’re currently spending, what we’re currently making, and we’re going to see if there’s any extra we could be putting to our payments.
Now, we’re not just going to take, let’s say, $100 extra and distribute it to every piece of debt we have. The reason we listed it from highest interest rate to lowest interest rate is because we’re going to put, let’s say your extra $100, and again, these are sample numbers, towards the debt with the highest interest, not necessarily the debt with the largest balance. If you have $5,000 of credit card debt at 25% but you have $40,000 of student loans at 4%, you might think, oh, I need to put that extra $100 towards my student loans, but your credit cards are costing you more money. They’re a higher percent interest and they’re also ones that you can get rid of quicker because the balance is lower. We’re going to go off of the interest rate; that is the thing that’s costing us the most money. And we’re going to contribute extra money to the loan that’s costing us the most because, again, biggest interest rate.
Now, specifically, where does that $100 go? Again, I mention this in my book, but when I had a car loan… I still own my 2014 RAV4; she is my baby. And when I chose to purchase her certified pre-owned, I took out a loan for her and I opted for a higher monthly payment to lower my length of my loan. My monthly payment I think was about $400. And there was one month, I think it was November when I had gotten some extra money, and I was like, “Cool, I’ll send in this extra $50 in addition to my $400 normal payment, and it’ll help me pay off the loan faster.” But then what happened is I got my balance in December, I got my bill in December and instead of $400, I owed $350. Now, you’re like, “Cool. Okay. Well, you paid $50 towards the next month.” But here’s the deal: that didn’t actually do anything. It just saved future me some money; it didn’t actually lower the price of the car.
When I called Toyota and I was like, “Ding dong, hello, how do I submit money to just the principal?” Which, as a reminder, is the original amount of money I took out, they were like, “Oh, well, if you want to do that, you’re going to have to send the additional money you want to go to the principal to this random PO box in Iowa.” Companies are sneaky. I’ve talked about this on the show before. I talk about this on my book. Companies are sneaky. They don’t want to give you this information if they don’t have to because it keeps you in debt for longer, AKA makes them more money. It wasn’t in the online portal when I logged in, it wasn’t on my statements. I had to call Toyota and sit on hold for a little bit and then ask them, “Hi, how do I actually do this?” And they’re like, “Oh yeah, PO box in Iowa.”
When you’re submitting this extra money to go towards the debt with the highest interest, we want it to go to the principal, the original amount of money we took out. Because if we can lower the principal, we’re going to pay less interest. If we can lower the original amount of money we took out as a loan, we don’t have to pay as much interest, which is what we want. If you’re unsure how to do this, call and ask. Call and ask your bank, call and ask your student loan provider, “How can I contribute to the principal of this debt?”
One important note here. For loans, you can do exactly what I just talked about and call and ask that more is going toward the principal, but with credit cards, this sometimes doesn’t work, which is part of the reason why this is so frustrating. Now that you’ve got your debts written out and you’re using the avalanche method, which is my personal favorite, let’s jump in with the Debt-free Guys all about their method, which is called the lasso method. That and more after a word from our sponsors.
I think that one of the things that was interesting about you guys is you did what you call the debt lasso method, and that’s one of the things you teach. We hear from Dave Ramsey the debt snowball method, the debt avalanche method. What is the debt lasso method? And how did you use that to pay off your debt?
Speaker 2:
Yeah. Dave Ramsey tries to position himself as the answer to everybody’s credit card debt problem, but he advocates for the slowest, most inefficient way to pay off your debt.
Tori Dunlap:
Yes, he does.
Speaker 2:
You think if he was going to be such a guru, he would come up with a smarter strategy, but now we think that we did. What-
Tori Dunlap:
Tell us what it is.
Speaker 3:
I’m the other Dave.
Speaker 2:
“I’m the other Dave.” Oh, that’s a good title. Let’s do a commercial.
Tori Dunlap:
Yeah.
Speaker 2:
We had $51,000 in credit card debt, and we started to crunch the numbers and look at, okay, if we do the snowball method, it’s going to take this long for us till we’re debt free. And we did the avalanche; it was going to take this long. And I think between the two of them, it was going to be like six to eight-
Speaker 3:
Somewhere between four and six years.
Speaker 2:
Four and six years. And we are… And by we, I mean me. We’re very impatient people. When I hear the strategy of paying off $230,000 in credit card debt in three days, I’m like, “Ah, sign me up.” I wanted to come up with a strategy to pay off as quickly as possible. We just thought that four years, six years was going to be way too long. I don’t know that we could stick with it that long. The longest relationship we had before that was like our mom and dad, and we couldn’t even leave them.
We did some number crunching, and David’s like, “There’s one variable that’s slowing this down, and that is our high credit card interest rates.” And so the quote we started asking ourselves, “Is there a way to make this credit card interest rate go away?” And we weren’t that educated on credit cards at that particular point in time, so we started to do our research and we found that there are zero interest rate credit card offers. And at that time there were some that were as… The offers lasted for anywhere from 18 months, some.
Speaker 3:
18 to 21 months, I think.
Speaker 2:
20 month. Yeah, some-
Speaker 3:
I think the longest one we got was 21 months.
Speaker 2:
Some ridiculous terms. And we thought, well geez, even with the transfer fee, if we focus on paying off our debt, the transfer fee is going to be negligible and we probably will only ever have to transfer our credit cards once, at most two times till we could get this debt, credit card paid off. That’s what we ended up doing. And we decided to call that the debt lasso method because what you’re doing is you’re reigning in all your credit card debt to as few locations as possible with the lowest interest rate as possible.
Now, everybody can’t get a zero interest rate credit card loan to cover all of their debt, so we try to do it with as much debt as you can or they don’t qualify for as your zero interest rate credit card. That’s fine. There are other low interest offers out there that you can look into to help try to lasso your debt. That’s what we’ve come up with as the debt last method, which we’ve now parlayed into five steps.
Speaker 3:
Yeah. I’ll add that part of the reason why it was so glaring to us is because when I did our spending analysis, when I sat down after we had our oh, shit moment, I sat down and I looked at every single penny that we had spent on all of our accounts over a 12-month period, and what I started to see was how much we were paying in interest on our credit cards. And we were paying $10,000 a year. And so I was like, “Well, we’re not going to make any progress if we’re paying $10,000 a year.”
Tori Dunlap:
Right.
Speaker 3:
I mean, we were making decent money. It’s not like we were making a ton of money, but we were making decent money. And I knew that it was-
Tori Dunlap:
Right, but if you’re contributing $10,000 a year to paying your credit cards off, but then you’re going an extra $10,000 into the whole every year, it’s like you’re not going to go anywhere.
Speaker 3:
Right.
Speaker 2:
Exactly.
Speaker 3:
Yeah.
Speaker 2:
And that’s the strategy, I think.
Speaker 3:
Yeah. The debt lasso method is more than just doing the refinance piece; that is a part of it. Because a lot of folks use that refinancing as a way to just kick the can down the road as to when they’re going to pay their debt off.
Tori Dunlap:
I was about to say, for listeners out there, this is a great solution if you have a plan that you will stick to.
Speaker 3:
Right. Right.
Tori Dunlap:
This should not be yet another bandaid where you’re like, “Okay, cool. Well, I’ll just put it off for 18 months or 12 months.” It beautifully works if you actually get honest with yourself and create a plan that you stick to.
Speaker 2:
Right. Yeah.
Speaker 3:
And that’s what the five steps of the debt lasso method really are. The first step is commit. And commit is broken down into two pieces. And that is, one, commit to not adding any more to the balance on your credit cards. Because you can’t pay them off if you’re racking up debt on them. The second part of commitment is to commit to making a specific payment amount to your debt every single month. A lot of folks will just send money here and there when they have it when they know that… They pay their minimum plus $5 or they pay their… “Oh, I’m doing well this month. I’m going to pay my minimum plus $25.” We recommend you make a commitment that every month you’re going to send a specific amount, it becomes a bill, you pay it every single month, and then when you do have extra, say from a tax return or a bonus or mom and dad give you money for your birthday, use that extra money when you can. That’s the first step.
The second step is to trim. And this is where we do piggy it back a little bit off of Dave Ramsey, and that’s if you need the motivation, find that credit card that has a balance where you can pay it off in one or two months. Knock that one out. Get that one out of the way so you feel like you’re making some progress. Then the lasso starts in where you try to get all your debt into as few locations at the lowest interest rate as possible.
Then after that, we encourage folks to automate everything. Remember, we said make that commitment as to how much you’re going to pay, make sure that’s automated. Just like all your other bills automate those payments so you’re not missing them. Because one missed payment on some of those zero balance transfer cards can cause you to go from 0% to 27% or 28%. We don’t want that happening.
And then the last piece is just monitor it. What check in once a month to make sure everything is still working. You don’t need to be looking at it every single day. Move that out of your worry zone and automate that part, and then just check on it once in a while.
Tori Dunlap:
Debt consolidation has entered the chat. If you’re unsure about what this is, I did an episode specifically a couple months ago about paying off credit card debt. Spent a lot of time talking about debt consolidation versus using personal loans to consolidate your debt and why I think personal loans are an excellent tool for debt payoff. In the next section, I’m talking more about it. I’m laying out who this is for, how you can use it as an incredible tool to fast track your debt payoff. Let’s get into it.
When people talk about drowning in debt, it’s not because they don’t have the manual to pay it off, although I think of course education helps; it’s probably why you’re listening to this. That’s why you engage with my work. But it’s really about the consistency. It’s about staying consistent, it’s about progress over perfection, and it’s about just slowly, slowly chipping away at your debt balance, and preferably without going into more debt while you’re trying to do it. Because like I said before, really hard to dig yourself out of a hole that sand is also still falling into. If you’re right in the midst of that feeling, the, “You know what? I am so overwhelmed by this, and I feel like I’ve tried everything and I’m slowly chipping away, but it keeps accumulating, it keeps compounding and it doesn’t feel like enough,” I do have a solution for you. Let’s talk about personal loans.
Personal loans allow you to borrow a lump sum of money to pay off multiple debts. You then pay off the loan in fixed monthly installments over a set period of time. This is usually two to five years. It is another kind of debt, but let me tell you why and how it’s different. The incredible thing about personal loans is, one, that fixed monthly payment. It is fixed, it is digestible, and folks from our community who have already done this who have taken out personal loans to pay off their credit cards have cited that they finally feel like they can breathe again because it’s digestible, it’s specific, and they have a plan.
The second incredible thing about personal loans is that you can take a bunch of different debt… If you have multiple credit cards with debt on them, and you can combine it into one monthly rate. We can whole ass many things as opposed to just whole assing one or half assing many. It’s Ron Swanson’s dream.
But the best thing for me about personal loans is that the interest rate is different and better than credit cards. Remember at the top we explain credit cards, the interest rate is not only compounding, but it compounds every single day. That means if you are in credit card debt, every day that goes by, you are earning interest on that debt. You are spending more money being in debt. Personal loans, however, charge you simple interest. That’s the take out $1,000, only pay 10%. That’s what we’re talking about here. It does not compound and it’s one simple interest rate. It’s one fee. Personal loans make your debt a hell of a lot more manageable, a hell of a lot more focused for your debt payoff journey, and a hell of a lot less expensive.
The final thing that we love about personal loans for people with credit card debt is that the interest rate is usually way lower. As opposed to 25% interest on your credit cards, you can pay 10% interest or 12% interest. It’s typically three, five, sometimes 10 or more percentage points less in interest than you are paying on your credit cards.
The powerful thing about personal loans, lower interest rates, personal loans are coming with much lower interest rates than credit cards. Two, the type of interest. It’s not compounding every day. It is fixed. It is simple interest. There’s also fixed payments so there’s no variable interest. You’re knowing exactly what you’re going to pay each month and there’s one payment. There’s one single loan repayment that simplifies your finances.
Things to consider before a personal loan. We have our recommendation for a personal loan provider down below, but before you check that out, some things to consider before getting a personal loan. One is your eligibility. Providers are not going to typically provide you with a loan if you have a low credit score. Why? Because you are more risky to them. When a loan provider gives you money, they want to know that you’re going to pay it back, and the way the system works right now is the credit score is the big determining factor. They don’t want you taking on more debt if they feel like you’re not going to be able to handle it or if they feel like this isn’t the best solution for you. Eligibility includes your credit score, your income, and what’s called your debt to income ratio. This is going to affect not only do you get approved for a personal loan, but also what the interest rate is. And the debt to income ratio is exactly what it sounds like: How much debt do you have versus what do you bring in every year?
The second thing with a personal loan is the fees. You want to watch out for any sort of hidden fees, including origination fees, which are just like the start of the loan. My least favorite fee is that some personal loan providers will charge you an additional fee for paying off your personal loan before the terms are up. If your personal loan is three years and you pay it off at two and a half, you might have to pay a fee. That’s bullshit. The one that I recommend does not have that fee because that’s a bullshit fee in my opinion, and I don’t want you paying that fee.
And finally, something to consider is what are the loan terms? If you’re about to take on a personal loan that is not that much better than a credit card, it’s only an interest point away, it’s 1% difference, it might not be the most advantageous thing. Or if you find yourself going to have to pay this loan off forever and ever and ever, and you do think you can maybe pay your credit cards off, probably not a good idea to take out that personal loan.
Finally, before you do any sort of finagling your debt, if you do not have a plan and you’re just getting a personal loan or any of the rest of these to kick the can further down the road so that you don’t have to fucking deal with it, you’ve like ostriched yourself so far in the sand that you’re like, “Oh, this will be a Staples that was easy button, and it’ll buy me more time,” and you’re not even going to think about it, that’s not the solution here. We have to do things that make our debt cheaper and make our debt more manageable while also understanding that we still have to pay it. Those things are not mutually exclusive. You have to make debt more manageable. And also, you’re not off scot-free. It’s not a get out of jail free card. I wish it was, but that’s not how this works.
Before we understand if a personal loan’s right for us, if any of the rest of this is relevant, using a personal loan to pay off your credit card debt is so effective, and we’ve already seen it in our community. It’s saving people thousands of dollars in interest and it’s making their debt more manageable and they feel finally some hope again. But it’s crucial to avoid accumulating more debt after or during the debt payoff process. If you are currently living above your means and you didn’t save that emergency fund first and you haven’t actually taken your personal finance education seriously and you’re just fucking raw dogging life right now and then you’re like, “I’m going to get a personal loan; it’s going to fix everything,” you haven’t changed any of your financial habits. Nothing is going to change in your life unless you change it. And again, you’re using it as a temporary bandaid solution, and that’s not going to be effective long term. We want to focus on building those good financial habits: paying your credit cards off in full every single month on time, not overspending our money, making sure we have an emergency fund and doing our best to build our savings so that we’re not dependent on expensive debt like credit cards to bail ourselves out later.
And finally, just tracking our money, knowing what’s coming in, knowing what’s coming out and actually investing in your financial education, showing up, listening to the show, reading my book, engaging with your money. Again, personal loans are an incredibly powerful tool, and we haven’t really talked about them on the show yet. I wanted to highlight them in this episode specifically about credit cards because they’re so effective when used correctly. We have the one we recommend, we already vetted it for you link down below. This is our partner recommendation. Again, some terms apply. It’s going to depend on your credit score, it’s going to depend on your eligibility, but please go down below. And checking to see if you qualify does not affect your credit score at all. Anybody who has credit card debt, you can go down below, you can click the link, and you can see if you qualify.
What personal loans should not be used for. Obviously this episode is mostly about credit cards, but if you’re thinking, oh, should I take out a personal loan to pay off my student loan? No, probably not. Should I take out a personal loan and consolidate my credit cards with my student loan, with my mortgage, with something else? No, no. Because, like we were talking about at the beginning, every kind of debt is different. The interest is different; it accrues differently. The cost is different. And as soon as you lump all of your debt together, all of your debt is the same. Only use a personal loan for something like credit cards that are really expensive and that compound your interest every single day.
As I mentioned, we have an incredible partner who we’ve used and recommended for a couple months now. They also have a five star rating on NerdWallet. And you can check your eligibility without checking your credit score. You can go to herfirst100k.com/payoff to see if you qualify. Terms apply, as always. Personal finance is personal, but this is a great resource to look into. When we come back from a word with our sponsors, we are finishing up our study hall episode with an expert all about debt settlement. In this clip, she shares what your rights actually are and what to know if you, as a consumer, are getting those debt collector phone calls. We’ll be right back.
I have so many questions about debt collectors and creditors. And it’s something that I admittedly, even though I’m a financial expert, I don’t know a lot about because I feel like, I don’t know, it’s very scary, and then a lot of people don’t talk about it because of the shame that comes with debt. At what point in the process do creditors usually start coming after the things you own or even wages? What can people do in that scenario? And also, what are they not allow What to take?
Speaker 4:
The debt collection process is somewhat complex. The way that it works initially, they’re not going to come after you initially. There are lots of laws that protect consumers. Usually what happens is you’d have to be delinquent for at least 30 days before that starts. And it starts on the slow process. It depends on the kind of debt, but let’s say it’s credit card debt. It starts a little slow. “Hey, you missed a payment.” You may get an email, a text message, stuff like that.
When it gets out of control, you’re talking months down the road where now it’s with a collection agency, it’s been outsourced from the original creditor. The original creditor tried to collect, couldn’t collect, and then outsourced it to a third party. And many people actually think that it gets sold, just because it’s a third party collecting that it’s been sold. And they call me up, and they’re like, “I know my debt’s been sold and I want to settle it for pennies on the dollar.” But it doesn’t get sold like that these days, and it’s not that quick a process. Even if it’s with a third party, that doesn’t mean that they bought the debt for pennies on the dollar. Many times they’re just a outsourcing agency that is trying to collect what’s called the secondary level.
You’ll get calls and stuff. We don’t see what we saw in the past 20 years ago where you were called a deadbeat or, “We’re going to come kidnap your dog,” or something like that. We don’t see that kind of stuff anymore. The Fair Debt Collection Practices Act, which is the law that regulates the consumer debt collectors, not original creditors… Original creditor would be like American Express, Discover, Capital One, those people. Once it cycles into a collection agency, that’s when that particular law kicks in. And there’s a lot of regulation on it these days, and we really don’t see too many rogue debt collection activities where you’re getting calls in the middle of the night, which they’re not allowed to do, calling you names, disclosing to third parties and saying, “Hey, your coworker doesn’t pay their bills.” We don’t see that kind of stuff anymore.
Where we see that stuff is in the business world, business debt, something called merchant cash advances, which is not an actual loan, it’s like a futures purchase. I see that a lot. I have a lot of women entrepreneur clients. And when you don’t have the requisite personal credit, you start to look for alternative sources of funding, and that can get you into trouble with these type of businesses, which will then be extremely aggressive.
But the debt collection practice, the biggest impact really is on your credit. You can block the calls, you can try to ignore them and that kind of stuff. But the moment you’re behind 30 days, it’s going to be reported on your credit. And building credit takes a really long time, but damaging it could take a day. It could take you years to get to that 740, 760, 780 credit score, and you’re super proud of it, but the moment you miss a payment and you go behind, it could tank it by 100 points. And rebuilding it takes time.
When you’re looking at it as somebody who you’re trying to empower yourself and what is it that you need to do? If you ignore it, the credit piece. And it’s not like you could say, like you said, “Can I ignore this?” In for a penny, in for a pound. And who cares? It will catch up with you because at some point someone’s going to need to check your credit, and without requisite credit, you’re going to have a really hard time getting anything from apartments to cars to even cell phones and other things like that. It’s definitely not advisable to ignore it.
But once they start calling you and kind of harassing you… And again, I don’t really call it harassment, it’s a methodical process. It’s put into what’s called a dialer. It’s comes from overseas, and they put it into dialers and computers, and the computer spits it out every certain amount of time. It’s not like it was when I first started in this business where, boy, you could be called up at your home by a debt collector and made to feel really bad.
Tori Dunlap:
There’s so much more to talk about about other kinds of debt, about using credit cards responsibly and more, and we have even more episodes to choose from to take your learning deeper. That’s your next step after you’re wrapped up this episode. To round out our time together, I leave you with a very classic Tori pep talk.
The final thing I want to touch on before I round out this episode, debt feels like a personal failing. If you are in debt, especially credit card debt, it feels like shit. You feel like it’s your own fault. You feel like it’s, again, some sort of personal defect or failing. And it is so easy to believe that if you are in debt that you are a bad person who has made countless unforgivable mistakes about your money. And you know me, I am not the personal finance expert that’s going to make you feel shamed or judged about your debt. There is light at the end of the tunnel. There is an incredible amount of freedom that comes with you slowly but surely and consistently chipping away at your debt. And the more shame and the more anxiety and the more fear you force yourself to think about and believe, the harder this journey gets. Tough love is not a real thing. You do not need to be condescended to in order to get out of debt. You don’t need to be shamed in order to get out of debt. Psychologically shame is the worst teacher and tool for accomplishing our goals.
I’m going to give you a hack I use instead. This is straight from chapter three of my book. This is straight from a previous episode. But let’s set some goals. When you’re thinking about goal setting, your goals need to be three things: specific, timely, and mission driven. It can’t just be, “I want to become debt free,” or, “I want to get better with money,” because that has no measurable quantifiable result. Getting out of debt and focusing on that as a goal might look like, “I will pay off all of my credit card debt by the end of 2025.” That is specific and timely. It is a specific thing you’re doing, paying off all your credit card debt by the end of this year. That is timely. You either know by the end of 2025 that you did it or you made some good progress.
But the thing a lot of people miss is that mission-driven aspect because, as I’ve proven to you, debt and getting out of it is actually not difficult on paper. The how is not difficult. The why is the hard part. The consistency, the showing up, the doing it over and over and over and over again, that is the hard part. You need to give yourself a reason to care, a reason to keep paying off your debt even when it feels hard.
This goal that is specific and timely, “I want to pay off all my credit card debt by the end of this year so that I can finally feel financially free and that I don’t owe anyone anything,” that’s the why. The why can be, “So I can finally start saving for this other goal because I’m not putting my money towards debt anymore.” The goal can be, “I am paying off this amount of debt so that I can better provide for my family, so that I can show up for myself and my friends and I can take that beautiful trip that I’ve always wanted to take.” This is unique to you. But you need to give yourself a why and a reason to care because if you don’t, when things get hard, when shit hits the fan in a couple weeks or two months or even two years, when you have a financial setback, when you start asking yourself, “Why the fuck am I doing this?” You know why. You know why.
And my favorite, favorite hack to help your goal setting actually happen, to make your planning actually successful is to write down your goals as if they’ve already happened. As opposed to, “I’m going to pay off my credit card debt by the end of this year so that I no longer have debt hanging over me and I can afford my life,” instead, think about it in the past tense, something like, “It feels so good to be in 2026 and to not have credit card debt anymore.”
Why do we do this? Well, it convinces our brains that we can do it. We’ve already done it. If we’ve already done it, then we know we can do it. Anderson Paak has this great quote in one of his songs, “If I know I can get it, I’ve already had it.” And that’s what we’re doing here. This is the hack I have used with every single goal that’s happened in my life. We literally recorded it yesterday. I was lucky enough to be on the We Can Do Hard Things podcast with Glennon Doyle and Abby Wambach. And I have wanted that, guys. Oh, my God. I have wanted this goal for years, for literal years. And I’ve been emailing and calling and texting people and pitching myself and hearing, “No, no, no.” And finally I got the email to be on.
And do you know what I was doing in my journal that entire time? “It felt so good to be on the We Can Do Hard Things podcast.” I was writing that a year ago. Before my book even came out, I was writing, “I’m so thankful to be a New York Times bestselling author.” Before this podcast was even released, I was writing, “It feels so good to have a top 40 money podcast.” Now, little did I know that it would debut you as the number one money podcast and the number one business podcast in the world. But this is what I’m talking about. If you can convince your brain, “You know what? We can do this because we’ve already done it,” then it puts you in that visualization state where you’re like, “Yeah, this is what my life can look like when I finally achieve this goal.”
If you are on a credit card debt payoff journey, know that I am here with you every single step of the way. And what I want you to do is I want you to share this episode right now with a friend or a coworker or someone else who you also know is on this journey too because we know it makes the journey a lot easier when you got a friend with you.
Thank you for listening to our Study Hall credit card debt edition. If you enjoyed the episode, feel free to subscribe on whatever platform you’re watching or listening to right now. Share it with somebody who you know needs it. We appreciate you supporting Feminist Media, especially right now. Thank you for watching, thank you for listening, and we’ll see you back here soon. Okay, bye.
Tori Dunlap:
Thank you for listening to Financial Feminists, produced by Her First $100K. If you love the show and want to keep supporting feminist media, please subscribe or follow us on your preferred podcasting platform or on YouTube. Your support helps us continue to bring this content to you for free. If you’re looking for resources, tools, and education, including all of the resources mentioned in this episode, head to http://herfirst100k.com/ffpod.
Financial Feminist is hosted by me, Tori Dunlap. Produced by Kristen Fields and Tamisha Grant. Research by Sarah Sciortino. Audio and video engineering by Alyssa Midcalf. Marketing and Operations by Karina Patel and Amanda Leffew. Special thanks to our team at Her First 100K, Kailyn Sprinkle, Masha Bakhmetyeva, Sasha Bonar, Rae Wong, Elizabeth McCumber, Daryl Ann Ingman, Shelby Duclos, Meghan Walker, and Jess Hawks. Promotional graphics by Mary Stratton, photography by Sarah Wolfe, and theme music by Jonah Cohen Sound. A huge thanks to the entire Her First 100K community for supporting our show.
Tori Dunlap
Tori Dunlap is an internationally-recognized money and career expert. After saving $100,000 at age 25, Tori quit her corporate job in marketing and founded Her First $100K to fight financial inequality by giving women actionable resources to better their money. She has helped over five million women negotiate salaries, pay off debt, build savings, and invest.
Tori’s work has been featured on Good Morning America, the New York Times, BBC, TIME, PEOPLE, CNN, New York Magazine, Forbes, CNBC, BuzzFeed, and more.
With a dedicated following of over 2.1 million on Instagram and 2.4 million on TikTok —and multiple instances of her story going viral—Tori’s unique take on financial advice has made her the go-to voice for ambitious millennial women. CNBC called Tori “the voice of financial confidence for women.”
An honors graduate of the University of Portland, Tori currently lives in Seattle, where she enjoys eating fried chicken, going to barre classes, and attempting to naturally work John Mulaney bits into conversation.
