How to pay off credit cards and get out of debt

Want to get out of credit card debt? this will help you map out the fastest way to get out of debt

Difficulty: Moderate

Instructions

Things You'll Need:

• All of you account information
• A spreadsheet
• Discipline

1. Make a spread sheet with all of your credit card debts. Sort them for highest interest rate to lowest; you will need this for step #3

2. Plan out how much you can afford to set aside to pay down credit cards each month. For easy math let’s make it $200

3. Let’s say you have 4 credit cards. Take the minimum payment required for all of them and add them up. Let’s say that number is $120.

4. Only pay the minimum on everything EXCEPT for the credit card with the highest interest rate. Take the reminder of your budget and apply it to the card with the highest interest rate

5. Once the highest rate card is paid off, snowball the money you were paying down to the next highest card. This will help you get to being debt free in no time.

6. This method will allow you to pay off you debt the quickest. Others will tell you to pay off the smallest debts first, which is nice to see instant results, but you will pay more interest if you do not follow the steps above.

7. If you come accross money that was unexpected (inheritence, tax refund, bonuses) put it all onto your debt. This will make you get to your goals much quicker.

Tips & Warnings

• be focused
• be realistic with your goals

[klnygaard]

on 7/13/2008 good ideas

[MIHealthCoach]

on 6/12/2008 Great advice! 5 stars

[Desula]

on 5/3/2008 I wrote an article about how you can potentially save $190 a month and apply it towards your debt. Even if you put $20 extra a month on your biggest debt, it will get paid off all the quicker.