Last Updated on July 28, 2023 by Mike
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.
Debbie Dragon writes about personal finance for Vertex42.com a site providing a variety of free excel templates and personal financial calculators to help you manage your money better.
This post has been really helpful. It is very important not to be panicked when you find yourself under a lot of debt. If you get panicked, you will lose your mind and you will never find a way to get out of the trouble. The first key is always to have the perfect idea of how much credit you have used. Figure out which bill is more and which one has a closer deadline. Try hard to meet that deadline. Keeping a calm mind, and planning properly is the key.
Wonderful post and thanks for the tips. Credit card debt payoff is one thing that can drive one crazy! You need to be really careful in using your credit cards and always be aware of the amount you are spending. If you want to buy something that costs a lot of money, first ensure that you would be having a steady cash flow in the upcoming months to pay off the credit card bills.
If you are in debt and cannot pay all the credit card debt, paying the minimum amount for all the cards is the best option. Before deciding what to do, you should carefully calculate what additional debt the remaining amount is going to put you into.
Thanks for this post. I was looking for similar tips online. I agree that credit card debts can be a great headache for many, if proper planning is not done. It is very important for the credit card holders to always keep track of their expenses using credit cards. Debts are created for neglecting or forgetting about how much you earn and how much you can afford to spend.
Should you fall in a debt, it is better to stop using the credit cards. Calm your mind and bring all the credit card bills in one place. The next thing to do is to list the debts in accordance with the highest interest bearing to the lowest interest bearing debt. Make sure to cross check the list twice to avoid any mistakes. Remember that leaving out a high interest bearing debt, might become really costly to you in the future.