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

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

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

“Neither of us paid attention to what we bought. We financed our own wedding. We financed our own wedding bands that were custom designed. And then we got a watch that was probably too expensive for us to pay, and all our those things add up,” Amy tells Insider.

The couple decided to refinance their credit card debt, which reduced their interest rate by 10%. According to data reviewed by Insider, the Crocketts got an $830 monthly payment to pay off the debt in a year, but Amy was determined to pay it off faster.

She found out how much interest she had to pay per day

First, Amy calculated how much interest she had to pay each day; it was about $2. She says “One of the things I love about SoFi [the company that refinanced the debt] in particular, they give you the ability to get that data right at your fingertips. I realized that while I was playing with the app, you can calculate back how much interest is 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 reduce the principal balance of the loan. Amy adds, “The fascinating thing about this is that if you stay on top of it, your balance starts to shrink because you lose $10 in principal and your interest starts to shrink on top of that. Pretty quickly it destroys that debt mound.”

She made small daily payments manually

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

According to data reviewed by Insider, Amy started manually paying $4 each day, increasing her daily contribution to $10 a day once she gained momentum. In one billing cycle alone, Amy was able to reduce her principal balance by $5,220.

She paid off $40,000 in just six months

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

The Crocketts used this experience to use their enhanced credit to purchase more rental properties in Fort Worth, Texas. They also drastically changed their relationship with spending after being so focused on paying off $40,000 in credit card debt.

Amy says, “I used to want all the cool cars on the road. Today I drive a paid off car. It’s a 2015 or 2016 Hyundai. And I watch the Teslas go by. As a tech person, I think: “Oh, I’d really like to have that.” And then I think, ‘Boy, if I spent that money, it would be the exact payment to acquire a house that would eventually perpetuate financial freedom.'”

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