How Many Vacation Days is Credit Card Debt Costing You?



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Today, I want to help you learn something that I thought I knew, but then because I was little to clever with things, it ended up kicking me in the butt and took me a while to figure it out properly. That’s right: credit card debt.

Maybe you're in the same situation. If you look at statistics on credit card debt for Americans, you'll see numbers anywhere from $4,000 to $6,000 per individual or $10,000 to $16,000 per household. There’s a lot of data out there that you can interpret in many different ways, but we at least know there’s plenty of credit card debt in the USA.

Rather than try to prove anything, I want to just show you a simple mathematical example of what having credit card debt can be costing you in vacation time.

Doing the Math on Credit Card Debt

Imagine you have $12,000 of credit card debt, and you're paying 25% on that. 25% of $12,000 would be $3,000 annually, and if you divided that monthly, that would be $250 per month that you're paying in credit card interest.

You're paying that amount with after-tax dollars, so there are no tax breaks on that. It's not like a mortgage or student loan interest that could get a tax break. What’s more, that's what you're paying just to carry the balance, without paying anything else off.

Let's say you're earning $10 an hour, and working 8 hours a day. That’s $80 a day. If your tax costs you 25% of your paycheck, then you're taking home $60 a day. Well, $60 x 4 would be $240 bucks, right around the same number we just looked at in credit card debt. That means it’s costing you 4 days every month just to carry your credit card balance, just to tread water.

You might well make more than $10 an hour. Let’s say you make double that, with the same amount of debt. You're taking home $120 per day, but your debt is still costing you 2 days per month. That's two Fridays per month you could be taking off if you were able to get on top of your credit card interest.

And if you're making $40 per hour, with the same debt, you’re taking home around $240 per day, so it's still costing you a whole day every month. That's 12 days per year for you simply to carry credit card interest. You're getting nothing additional in benefits for that.

What is Your Credit Card Interest Costing You?

When you have really high interest repayments on your credit card, it's not getting you anything at all. It's not backed up or guaranteed by a home or a car. This is just money that was spent with nothing to cover it.

So what can you do about it? How can you reduce your credit card debt? I come from the generation where we were first introduced to credit cards when we were about 18, and they had these mass mailers that would come out. Credit card debt for a lot of people got them in trouble very quickly. Nowadays, student loan debt might be doing the same for some people, though that's a little bit of a different conversation. But the concept of having a lot of debt impacting your situation, especially when it's not guaranteed by anything, is really brutal on you.


How to Reduce Your Credit Card Debt

1. Plan What You’d Rather Spend the Money On

The very first thing you can do is to find something that's more important to you than either overspending on your current lifestyle OR that's exciting enough that you are motivated to take time off to do it. You have to have a goal that's more exciting than what you're currently doing with your money. Otherwise you'll find it very hard to change your spending habits.

2. Reduce Current Lifestyle Spending

This is not about trying to make your life horrible. This is about working out what you could cut away without it really mattering. Gym memberships often go unused, or cable TV packages, or even something like a second car. See what you could be saving money on without making your life miserable.

3. Renegotiate Credit Card Rates

You might be surprised to know that you can often contact your bank and ask what they can do for your credit card rates. After all, they want to keep customers, and especially credit card customers. Ask your bank if you can take a break on your credit card interest. They probably won’t let you off forever, but they might give you a period at a reduced rate. Don’t be afraid to tell them that you will take your business elsewhere if they can’t give you what you want.  

4. Think About a Balance Transfer

Sometimes you can get a 0% balance transfer credit card with another company. This is a bit of a Catch 22 situation, however, as these tend to only be available to people with good credit. If your credit score is bad, they might be tougher to get. The other thing to remember if you do this is not to go and spend the new balance as well, which is a trap a lot of people fall into.

5. Throw Away All New Credit Card Offers

Unless they’re offering you a better interest rate or a 0% balance transfer, and you’re going to cut up another card to use the new one, just throw them away. They’re more likely to get you into further credit card debt than to bail you out.

6. Pay Off Your Highest Balance Credit Cards First

This is one of the core strategies when you do credit counseling, but you can do this, and all of the other things we’ve discussed here, without going through a credit card counseling company. Though those companies can be immensely helpful, you might not be at that stage yet.

7. Temporarily Reduce Investments in Your Savings, If Necessary

The temporarily part in this is very important – otherwise it can be very easy to get out of the habit of saving, and just spending this money instead. But in the short run say you have $12,000 in credit card debt, and you’ve been paying $500 a month into your savings, you could knock out that 25% interest quickly, then get back to making savings. It all depends if it makes sense in terms of your savings, and assuming that the interest you’re earning on your savings is less than or equal to the amount you’re paying in credit card interest. I’m not saying it works for everyone, but it could work for you.

8. Track Your Credit Score and Work to Improve It

You can often do this via your online banking, or by contacting your bank to ask for your credit score. If not, there are a number of online services that can help you to do that, such as Tracking your score, and looking at how your habits affect it, can to improve your credit score, as well decrease your credit card interest too.

9.  Create a Budget

It might sound boring and old fashioned, but at the end of the day, a lot of this is just math. Base your budget off what you earn, so that you won’t be spending more than you have coming in. It sounds so basic, but lots of people don’t do it. I’ve used Quicken to create my budgets for years, and that works for me.

10. Track Your Finances Monthly.

Track your monthly spending, and try to not have more going out than you have coming in. I've used the Quicken app for years, but use whatever works for you. There have been times when I’ve tracked my spending, and times when I’ve let it slide, and the times when I’m actively tracking my spending are definitely when my spending habits and bank balances are much healthier. If you’re a small business, I can recommend QuickBooks or a similar tool to track outgoings and income.

What's Next?

If you want further help with reducing your credit card debt, go to, where we have a free tool called the Vacation Debt Calculator. It’s simple to use and Excel-based. The aim is to help you free up more time and see how much mismanaging your money is costing you, in money and in time.

If you want to go more in-depth on creating your 4-Day Work Week Game Plan, go to, where you can start creating your individual plan to work less and make more. There are a couple of great tools and tutorials there about budgeting and prioritizing, and how these can help you get down to 4 days. If you have any questions about this, feel free to ask me in an email.

As always, I look forward to helping you create the lifestyle you most desire and helping you make more money in less time doing what you do best.





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