Simple Tips for Fast Credit Card Debt Payoff
Of all the debts a person may have over the course of their lifetime, credit card debt is probably the most costly. If you aren’t extremely careful, credit card purchases can quickly create a desperate financial situation, making it difficult – if not impossible, to keep up with your monthly payments.
Looking at all of your financial obligations can be overwhelming – and make some people give up the idea of becoming debt-free all together. Instead of giving up – simplify the process:
Know Where You Stand
Before you can focus on paying off your debts, you need to know exactly how much you owe and who you owe it to. Make a list of your credit card accounts, including how much you owe, the interest rate, and the minimum monthly payment. Enter this information into a free Credit Card Payoff calculator from Vertex42.com, and see how long it will take to pay off your credit cards with the monthly payment you can afford to make. Don’t let this scare you – you can pay it off quicker with the debt snowball strategy.
Figure Out Your Credit Card Payoff Plan of Attack!
Treat your debt payoff goal like something you must attack. Once you have your list of credit card accounts, put them in order depending on the debt reduction strategy you want to use – you can pay highest interest accounts first or the lowest balance accounts first. Using a debt snowball payment schedule will help you keep track of your progress. Each time you pay off one of your credit card accounts, send the money you were previously sending to that account to the next credit card account on your list. Your payments will get larger as you pay off each account, helping you get out of debt much faster.
As long as you do not take on any new debts or expenses while you are focusing on paying off your credit cards, by the time you’ve finished paying them off you’ll have quite a bit more money available each month. For some people, paying off credit cards results in a couple hundred dollars of extra available income each month.
What to Do With Extra Income After Paying Credit Cards Off
After your credit card debts are paid, you can use your newly found extra income for paying off all other debts, like personal or student loans and car loans – and for saving and investing in your future. At this stage, you want to be extremely careful not to fall back into old habits and add new debts! If you intend to use credit cards, make sure you pay them off in full each month to avoid accumulating high interest debts and having to do this all over again. You can use a money management template or budget spreadsheet to help manage your money once you are debt free, to help you stay on track.