It is easy to get into credit card debt, but it is difficult to get out of it. However, with some discipline, a plan and dedication it can be done and you can live a credit card debt free life.
If you are committed to paying off your credit card debt, you will first need to determine how much you can afford to repay each month. The best way to see how much you are able to afford is to use your monthly budget, but if you don’t have a budget in place then now is a good time to start one.
Budgets Are Easy
A budget is easy to set-up. You first need to add up your net monthly income from all your sources. Then add up all your monthly expenses, which includes your minimum payments on your credit cards and loans. Then you simply subtract the expenses from your income. The number that is left, is what you will have left after all expenses. This is what you are then able to afford to send to your creditors each month. A good idea though is to look for other ways you can generate more money that you can put towards your debt as this will help to speed up the repaying process.
Once you know how much you can afford to put towards your credit cards each month, you will need to determine the order that you want to pay your credit cards off in.
2 Ways You Can Pay Off Your Credit Card Debt
Highest Interest First
In the long run, you are able to save money by taking on the credit card with the highest interest first, especially if it also carries the highest balance. However, it will also take the longest to pay off if the card has the highest balance, which means you may lose motivation.
Lowest Balance First
There are immediate benefits when you pay the lowest balance first. The first ones, you tackle will be easier and quicker to pay off. Once you have paid off a bill, you will gain a feeling of accomplishment, which will then motivate you to keep going.
If you are wanting to save money in the long run then you need to tackle the highest interest rate balance first, but if you want to get some accounts paid quickly then go for the lowest balance method.
You should write down your debts in the order that you have chosen to pay them either from high to low or vice versa. Make a note of the balance, interest rate and minimum payment.
The extra money you have will go towards the credit card at the top and the other cards will get the minimum payment.
Once the first credit card is paid off, cross it off the list and move onto the next one and so on.
Paying off credit card debt is not easy, but it can be done, you just need to have a plan and stick to it.