Paying off debt has been in the news a lot with the current economy. Credit card debt is a plague that has stricken countless families. Paying off the excessive debt can stress your monthly cash flow but having too much debt can keep you from getting a good rate on a home mortgage or car loan. It’s no wonder that so many financial experts insist that it’s imperative to get out from under credit card debt.
So, now that you understand why it’s important to get rid of credit card debt, you need to create a plan to accomplishing this lofty goal. To help you get started I am listing steps to help you obliterate credit card debt from our life.
Stop using your credit cards. You will never be able to get rid of your credit card debt if you are still adding to the debt. If you can’t bring yourself to cut them up, at least take them out of your wallet and stick them in a drawer at home.
Make a list of each of your credit card debts. On the list you’ll want to note the card’s balance, minimum payment amount, and current interest rate. This list will guide you as you decide which card to send extra payments to. You will also use this list to encourage yourself by crossing out listings as you pay them off.
Stay on top of minimum payments for all of your cards. Late payment fees can really add up so making all of your minimum payments is an important first step in paying off your credit cards.
Start sending extra money in to one of your credit card companies. There are lots of different schools of thought regarding how you should select this company. Some suggest that you should choose the card with the highest interest rate. Others suggest that you should choose the card with the lowest balance. Choose whatever method you like, but stick with it. Send in any money you can spare to that credit card company until you pay it off.
Roll the payments you were sending to your paid off credit card into your payments to the next item on your list. Keep working on that card until you’ve added it to the list of debts you’ve retired. Continue the process until you’ve paid them all off.
Be creative to find extra cash to send in order to speed your process. You may simply cut something extra from your budget, or you may sell something on eBay. Anything you can do to increase your payments will help you get rid of your credit card debt faster.
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I agree with everything you said. I am currently working off my credit card debt by paying off lowest balance, then going to the highest interest when I have more to apply to the payment. It will take awhile but in the end the lesson will be invaluable. The only thing I would add is, create a realistic budget, collect ALL receipts and categorize them. Keeping track of all spending makes you think before you spend.
My husband and I are now debt free and have paid off all of our credit cards!!! We are so excited and now can start putting extra money away into our Emergency fund!!! Woohoo!
My advice goes right along with Dave Ramsey’s…Pay off your smallest first. This way you can see the fruits of your efforts and you won’t get discouraged and give up!
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