How We Became Credit Card Debt Free in 2023
Back in the pursuit of being credit card debt free, in order to boost our monthly cash flow. Again?!
Since the housing recession of 2008, there has been a resurgence of being debt free. Most of which is squarely attributable to Dave Ramsey. Like him, worship his baby steps or hate him on social media; you can’t deny that he has been instrumental in sharing the gospel of rice and beans.
While the Baby steps aren’t my cup of tea, the simplified vision of debt freedom can work for the majority of Americans. Currently, the median American household is carrying over $500,000 in consumer debt (see Table #1). That puts most Americans on the course for financial disaster. Knocking down your debt is a great strategic move in the short and long run.
Just remember that being Debt Free is not exactly synonymous with building wealth. Be flexible with leveraging when you can. The goal is to get to your destination happy not miserable.
Table of Contents
First Step – Crush Credit Card Debt to Build Massive Wealth in 2025
Consider 2019-2023 as financial literacy on steroids. We were able to see the irrational highs, stock gambling, money pumping, and cocaine bear markets. However, the best takeaway is Cash Flow. Cash Flow (not Cash) is king.
You can create cash flow by increasing your income, decreasing your expenses, and finally decreasing your debt balance. Why? Your debt balance carries interest. How much? Well, nearly 100% of your principal if you only do minimum payments. On top of the opportunity cost of the alternative. To keep it simple, you are paying the price of the item, the interest, and also the value of the growth.
All this to say, interest is destroying your monthly cash flow and likely your sanity. Here’s a snapshot of what the Average American household is facing in 2023.
Table #1 – Average Debt of US Households as of 4.27.23
| *Interest Rate | Monthly Payments | *Amount Owed | Total Interest | |
| Housing also known as Mortgage Debt | 7.345% | $3,120 | $453,000 | $603,540 |
| Auto Loan | 6.07% | $959 | $49,500 | $8,015 |
| Credit Card Debt | 20.92% | $170 | $6,194 | $10,214 |
| Student Loan Debt | 6% | $269 | $37,574 | $27,032 |
| Total | $4,519 | $546,268 | $648,801 |
**Based on the 3% minimum payment calculator
The Secret Shame of the Middle Class – Debt!!!
While our household debts may vary from city to city, in the end over $500,000 in interest is pretty costly.
The problem and the solution are both the same. It’s You. That should scare you and also reassure you since the solution driver comes down to your own effort.
For example, my wife and I technically don’t need more money. We need to spend less at Amazon. Over the last 5 years, we’ve spent over $50,000 on Amazon purchases. They weren’t massive purchases since that would raise alarms. It’s the small micro expenses of $40 or less, that stab us in the back.
Most families are overspending by at least $5,000 annually. If you start tracking your spending, you will also notice where all your dollars are going. When you are finally (and truly) fed up, all you need is a financial plan to right the ship.
Everyone Has a Debt Free Story. The Real Story is What You Do Next!
Instead of beating ourselves down about past (intentional/deliberate) mistakes, it’s time to look forward. A great financial strategy marries the need to pay down debt and build wealth.
While Dave Ramsey would definitely disapprove, we found a balance in paying down debt while investing. (see Table #2). We piled on over $20,000 worth of credit card debt before. However, we strive to pay it down diligently.
This year, we are on track to pay almost $67,000 worth of credit card expenses while investing $90,000.
Table #2 – Monthly Credit Card Expenses as of 4.27.23
| Credit Card Expenses Paid | Monthly Net Worth | Growth/Loss in Dollar Value | Growth/Loss as a Percentage | |
| January 2023 | -$11,742 | $807,932 | +$52,754 | +6.53% |
| February 2023 | -$6,211 | $805,525 | -$2,407 | -0.30% |
| March 2023 | -$14,873 | $831,904 | +$26,379 | +3.17% |
| *April 2023 | -$10,364 | **$807,364 | -$24,540 | -3.04% |
| May 2023 | -$4,254 | $824,720 | +$17,356 | +2.10% |
| June 2023 | -$3,538 | $842,849 | +$18,129 | +2.15% |
| July 2023 | -$2,324 | $861,356 | +$18,507 | +2.20% |
| August 2023 | -$3,340 | $881,252 | +$19,896 | +2.26% |
| September 2023 | -$3,341 | $848,643 | -$32,609 | +3.84% |
| October 2023 | -$1,876 | $865,917 | +$17,274 | +1.99% |
| November 2023 | -$1,796 | $883,573 | +$17,657 | +2.00% |
| December 2023 | -$3,576 | $900,000 | +$16,427 | +1.86% |
| -$66,935 | +$144,823 | +19.18% |
**New Vehicle, $55k Auto Loan; Medical Payments, $6k; Taxes, $6k; and, Upfront Travel Costs, $5k
Hitting The Debt Free Mark Again during the Journey
If you notice in Table #3, we reached debt freedom as of March 2023 and immediately went back in. Why? It’s a fleeting moment. The Wealthy aren’t too concerned about leveraging assets or liabilities such as credit cards.
Once you built the discipline against spending splurges, you will find that these cards are merely tools or quick building blocks. In April, we threw in $7,000 for tax payments to the IRS on the credit card as well as $5,000 for travel and $5,000 for medical/dental expenses.
My wife and I use all the tools at our disposal to build credit, earn reward points and etc. Debt comes down to how you use it. The travel cards that we use, give us hotel perks, travel lounges, TSA precheck, CLEAR, Global Entry, and even $240 on entertainment ie Disney Plus, Audible, and New York Times. Read up on how the credit card companies are paying us.
It works for us. And if it comes back to using credit cards to pay for another major expense, we will. Simple as that. The best part is that our credit and FICO scores are north of 750.
Table #3 – Credit Card Debt Free Moments as of 4.27.23
| Credit Card Expenses Paid | *Interest Charged | Balance Remaining | |
| January 2023 | -$11,742 | $1,054.74** | $5,177.10 |
| February 2023 | -$6,211 | $6.92 | $6,010.85 |
| March 2023 | -$14,873 | -$180.90 | $0.00 |
| April 2023 | -$10,177 | –$30.00 | $8,175.00 |
| May 2023 | -$4,254 | $112.37 | $6,000.00 |
| June 2023 | -$3,538 | $91.98 | $4,500.00 |
| July 2023 | -$2,324 | $47.04 | $2,750.00 |
| August 2023 | -$3,340 | $26.38 | $250.00 |
| September 2023 | -$3,341 | -$15.84 | $0.00 |
| October 2023 | -$1,876 | -$20.00 | $0.00 |
| November 2023 | -$1,796 | -$20.00 | $0.00 |
| December 2023 | -$3,576 | -$20.00 | $0.00 |
| -$66,935 | $1,240.01 | $0.00 |
**High-interest month due to annual credit card fees
Redefining FIRE + Generational Wealth with Debt Free Strategies
- Investing +$2,500 per month in M1 Finance Brokerage focused on Growth and Dividend Income that generates at least $1,000 in passive income in 2025. Check out the portfolio in real-time. If you like the platform and want to start investing, I have the $10 for $10 referral if you need it – https://m1.finance/SYdqDJ2SyADC.
- Shooting for a sustained growth toward $900,000 net worth by YE. If you need help monitoring your savings, cash flow, net worth, investments, retirement, and more, check out Empower (formally Personal Capital). It’s FREE! Sign up with my link & get a $20 Amazon gift card. *Terms apply. https://pcap.rocks/lawrencegonz
- Build out Future Workshops for Financial Literacy Month in 2024 – Setting new goals and pushing the community forward.
- Travel to 3-5 Countries in 2023 and 2024. Currently set for a wedding in Mexico and our anniversary adventure in South America. Next year, back to Europe we go! We cut out the stuff we don’t care about, to make room for the stuff that we do.
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