Now that the holidays are over, it is that time of year where we start paying off your credit card debts from Christmas spending.
Debt is a scary and stressful when you are faced with the monthly statement. It is the constant reminder of the debt that you have accumulated throughout a couple of months.
Instead of ignoring it, it is time to face these credit card debts and live stress free of debt.
9 Easy Steps To Get Out of Credit Card Debt
I have added an example you can follow.
1. Make a list of all your credit card debts.
- Master Card
- Line of Credit
2. Write amount owing for each credit card
- Visa – $7000
- Master Card – $5000
- Line of Credit – $4500
3. Write the interest rates for each credit card.
Rate each card starting from 1 as the highest interest card, then 2, the next highest, etc.
- Visa – $7000 – 11% interest (#2)
- Master Card – $5000 – 20% interest (#1)
- Line of Credit – $4500 – 8% interest (#3)
4. Write the minimum payments for each credit card.
- Visa – $7000 – 11% interest (#2) – Min $100
- Master Card – $5000 – 20% interest (#1) – Min $200
- Line of Credit – $4500 – 8% interest (#3) – $150
5. Calculate the total minimum payments for all cards.
- TOTAL MINIMUM PAYMENT = $450
6. Do you have any extra money this month?
In addition to the total minimum payments in 5 that you can put towards your credit card debt?
This can be determined by creating a budget which I will discuss in another post.
- Extra money = $300
7. If ‘Yes’ to 6, then put this extra money into the highest interest rate credit card.
We chose the highest interest rate credit card because this is what is costing you most each month.
- Monthly payments to Master Card will be $200 minimum + $300 extra money = $500 per month.
If ‘No’ to 6, then make sure to pay the minimum payments but it is time to dig deep and start making more money or find ways to save money in different areas of your life in order to pay for these debts.
8. Once the Master Card is paid off, you can start paying the next highest rated credit card which is Visa.
- Monthly payments to Visa will be $100 minimum + $500 from what you were paying previously on the the Master Card = $600 per month.
9. Then you repeat steps 8 according to how many credit cards you have to pay off.