3 Easy Ways to Pay Off Credit Card Debt
Just a few weeks ago, my husband, Kevin and I were in over $25,000 in credit card debt. No our cards weren’t maxed out, not a single one was. But they were close to their limits. We knew that we had to get rid of our credit card debt or get it under control FAST in order to apply for a mortgage loan. Read on for 3 easy ways to pay off credit card debt!
Let’s start with the easiest way to pay down your credit card balances.
Add a few bucks extra to your minimum payment!
You’re probably wondering why I said this first… well that’s because it is by far the easiest thing to do to lower your balances. It may take a while, but it can shave YEARS off how long it will take for you to pay back your debt. PLUS…. It saves you money because you aren’t wasting money on INTEREST!
This is a screenshot for one of my December 2015 Credit Card statements. You can see that I had a $1,910 balance.
In this screen shot it shows you that if I would have only paid the Minimum Payment it would have taken me 11 YEARS to pay off that $1,910. PLUS I would have ended up paying at least $4,401 with all the interest included. Even before December 2015, I was paying at least twice on this card. Two times the minimum payment. So about $100 or so a month. But I used the card to buy my kids a new computer for Christmas. Sometime in December, Kevin and I had a heart to heart about our credit card debt. None of it was behind, but I felt like we were suffocating ourselves with the total amount between all of our cards.
So we made a decision to start putting an extra $500 a month towards our highest interest rate card (that would be the account I just showed the screenshot for above). Because of his new job and the increase in pay. Right off the bat, he was making 2.5 times what he made at his previous job. So we have been used to living off of next to nothing. Well we buckled down and paid off $1,500 on that card in just two months. I still have a small balance of around $170 to pay off in the month of April and that card will not be used unless of an emergency.
Now I know a lot of people that cannot afford to drop $500 a month or more on credit card debt. So put as much as you can squeeze out of your “budget” towards paying down your credit card debt. This will also help increase your credit score over time. In just about 3 months, my score went up around 66 points putting me into the “VERY GOOD” Credit rating on Experian’s website.
So putting extra money towards your minimum payment is step #1!
Get a Debt Consolidation/Personal Loan
Now this is something Kevin and I didn’t do. We used our 2015 tax return to pay off a TON of debt (more than $14,000). But when you get a debt consolidation loan, you’re getting one interest rate and only have to make one payment, not many. Plus your revolving debt will be gone and replaced with installment debt. Which basically means that you’re going to have a fixed payment. Your rates can fluctuate with a credit card regardless of your credit scores.
By having a fixed rate you’ll be able to save money on interest. So that means more money will go in your pockets than if you were to pay your cards off slowly over time. Such a win-win, in my opinion.
Take up a Second Job or Find a way to make or save money from home.
If you don’t have the time for a second job (Kevin can’t work a second job because of his travel), then find a way to make money from home or see if you can pick up some extra shifts/hours at work.
If you’re a stay-at-home mom like myself, than I suggest things like selling your crafts on Etsy/eBay, write an e-book and sell it on Kindle Direct Publishing (I’m doing this right now), sell baked goods, go flip thrift store finds on ebay or Etsy; if they are vintage. Refinish furniture, start a pet sitting service. Basically, find something you can do from home that will help you earn a few extra bucks to put towards your credit card payments like listed above.
Clip coupons. By clipping coupons and stacking them with sales, you can get great deals and save tons of money to put towards your debts!
We’re still working towards paying off the last $10,500 of our credit card debt. We’ll get there. Hopefully before the end of 2016. But very soon we won’t be able to dedicate $500 a month paying it all off. Because we’re hopefully going to be homeowners this summer. We’ve already got our pre-approval and are hunting for a home. So keep looking for updates and ideas on how to get rid of your pesky credit card debt.
You could apply two of these tips to towards any type of debt such as car payments, mortgage payments (we’ll be dedicating extra money to our mortgage as soon as we close on a house), etc. Keep an eye out for posts about paying down a mortgage in a shorter period of time than 30 years.
Thanks for stopping by to check out my blog! I really hope that you enjoyed my 3 Easy Ways to Pay off Credit Card Debt tips. If you did, I hope to see you back soon!
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