A simple math equation helped a couple pay off $40,000 in credit card debt in just 6 months

A simple math equation helped a couple pay off $40,000 in credit card debt in just 6 months

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  • Amy Crockett refinanced $40,000 in credit card debt to make payments more manageable..
  • She calculated the amount of interest she was paying daily, which was about $2.
  • She manually paid $4 to $10 a day on top of monthly payments, and paid off the debt in six months.

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Early in their marriage, IT client specialist Amy Crockett and her wife, Emily Crockett, quickly racked up $40,000 of credit card debt.

“Neither of us were paying attention to what we were buying. We funded our own wedding. We funded our own wedding rings that were custom-designed. And then we got a watch that was probably too expensive for us to afford, and all of those things added up,” Amy tells Insider.

The couple decided to refinance their credit card debt, which caused their interest rate to drop by 10%. According to records viewed by Insider, the Crocketts were given a monthly payment of $830 to pay off the debt in a year, but Amy was determined to pay it down quicker. 

She figured out how much interest she was being charged per day

First, Amy calculated how much she was being charged in interest every day; it was roughly $2. She says, “One of the things I love about SoFi [the company that refinanced the debt] in particular is that they give you the power to pull that data instantly at your fingertips. I realized, as I was playing around with the app, you can reverse-calculate how much interest is being charged on a daily basis.”

She then realized that making small daily payments equal to or twice as much as the daily interest charged would quickly decrease the principal balance on the loan. Amy adds, “What’s fascinating about that is if you keep on top of it, then your balance begins to shrink because you’re knocking off $10 of principal and your interest starts to shrink on top of that. Pretty quickly, it demolishes that debt hill.”

She made small daily payments manually

Amy says, “I figured out that if I pay $2 to $4 a day above that interest rate — even $10 a day if I can swing it — the balance went down shockingly.”

According to records reviewed by Insider, Amy started paying $4 each day manually, ramping up her daily contribution to $10 per day once she gained momentum. In one billing cycle alone, Amy was able to lower her principal balance by $5,220.

She paid off $40,000 in just six months

Amy says that paying off $40,000 in just six months inspired her and Emily to begin a debt-free journey. In addition to their credit card debt, the Crocketts also refinanced $25,000 in student loans and saved $1,200 per month by refinancing mortgages on their family home and rental homes.

The Crocketts used this experience to leverage their improved credit to buy more rental properties in Fort Worth, Texas. They also drastically changed their relationship to spending after being so focused on paying down $40,000 in credit card debt.

Amy says, “I used to want all of the cool cars that were on the road. Today, I drive a paid-off car. It’s a 2015 or 2016 Hyundai. And I look at the Teslas that go by. As a technology person, I think, ‘Oh, I would love to have that.’ And then I think, ‘Boy, if I spent that money, it would be the exact payment to acquire a home that would ultimately perpetuate financial freedom.'”

Leo Aquino (they/he) is a Spending & Saving Reporter. Before joining the Insider team, they covered relationships, sexual wellness, beauty, fashion and more, always uplifting stories of BIPOC and LGBTQ+ communities. You can reach Leo at [email protected].
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