Can I be honest with you?
Like most credit card debt stories, mine began with the feeling of freedom on the horizon.
At first, I was extremely watchful over my spending.
I would use my card for simple purchases such as food and gas, and then I would pay it off at the end of the month.
Over time, I began to use my card more freely. Eventually, I was spending more money than I was bringing in.
I started paying minimums and missing due dates, and eventually, I found myself, a college sophomore, over $10,000 in debt.
Does this sound familiar?
If so, let me assure you all hope is not lost.
As of today, I am completely debt free!
So, go ahead and take a sigh of relief because I am about to tell YOU how to pay off credit card debt.
What You Will Need to Follow this Step-By-Step Guide:
- Credit card information
- Monthly budget
- Pen or pencil
Step 1 – Get Organized
Before you can do anything, you must get all your financial documentation in order.
Locate all your credit cards and any financial information attached to them.
Using a pen or pencil and some notepaper, make a note of current balances, interest rates, minimums, and due dates.
At this point, you should add up all your minimums and determine how much it is going to cost you monthly to stay current on your credit card bills.
Next, have a look at your monthly budget, can you afford to pay more than the minimum?
If so, get ready to spend it. (If your budget does not allow you to pay more than the minimum, Nerdwallet has an excellent article on how to earn some extra money.)
Step 2 – Choosing Your Approach
If you haven’t already, be sure to round up all the information you documented in Step 1.
When it comes to paying off credit card debt, I like to think there are two approaches:
The first approach is simply to prioritize your smallest debts.
The idea is that you will slowly gain momentum as you watch your debt disappear.
That is why many experts, such as the writers at Credit Card Insider, refer to this option as the “snowball method.”
The second approach involves paying off your debts with the highest interest rate first.
Contrary to the first method, this option is commonly referred to as the “avalanche method”.
I prefer this approach, as it makes the most mathematical sense.
Nonetheless, both models are excellent choices when trying to pay off your credit card debt.
If you are worried about a potential lack of cash, don’t sweat it. You can quickly apply for a flexible emergency loan with established companies such as Elcloans if necessary.
In my experience, they offer easy eligibility and personal loans for virtually any financial situation.
Step 3 – Execution
Now comes the important part.
No matter which approaches you choose, it is pointless if you do not properly execute your method.
At this point, you will need a calculator, pen or pencil, some notepaper, and all your credit card information to calculate your numbers correctly.
If you have chosen the “snowball method”, start by paying the minimum on all your credit cards. After you have done this, locate your credit card with the least amount of debt. On this particular card, pay the minimum, plus any surplus money you can afford. You should continue these steps every month until you have completely paid off your debt.
If you have elected to go with the “avalanche method”, you will also start by paying the minimum on all your credit cards. Next, you will locate your credit card with the highest interest rate. On this card, pay the minimum, plus an extra money you can afford. As with the former approach, you should continue these steps until you have completely paid off your credit card debt.
Properly executing your plan is vital to paying off credit card debt.
At the end of the day, if you are not paying off your debts, you are not making progress.
If you choose a plan and execute it, you will be one step closer to financial freedom.
Step 4 – Refrain from Adding Charges
If you are anything like me, this will be the hardest step for you to conquer.
Let’s be honest:
it’s not that difficult to choose a plan and begin to execute it.
The hard part comes when you must refrain from using that piece of plastic in your pocket.
Do you think you’ll be able to pay off your credit card debt if new charges keep showing up every month?
Websites such as Investopedia continually stress the importance of managing your spending.
It is as simple as this, if you continue to use your credit card, you may never pay it off.
Trust me, I know it may be difficult, but you MUST set your credit cards on ice while you pay back your debt.
If not, you will find yourself in a continuous loop of debt.
Step 5 – Don’t Look Back
If you have made it this far in the guide, I offer you congratulations!
Paying off your credit card debt is a massive accomplishment.
Once you become debt free, it is vital you stay that way. Don’t fall back into your old habits.
To be honest, after I had become debt free, it was very tempting to fall back into my old spending habits.
You can’t let this happen!
Don’t look back! Use your credit card only when you must. Pay your balance in full every month.
I guarantee you, if you do these things, you’ll experience a level of financial freedom you have never felt before.
Have you enjoyed this tutorial?
I certainly hope so.
These steps have helped free me from over $10,000 in debt.
If you follow them as I did, I am confident they will do the same for you.
And if you enjoyed this guide, be sure to leave a comment and share with your friends.