How do you eat an elephant? One bite at a time! Well, that’s the same way you eliminate credit card debt, one bill at a time. I know many people differ on the methods to lower your revolving debt, and here’s another one. However, this one is tried and true and it has helped many of my clients eliminate their credit card debt. More importantly, it’s how I eliminated my credit card debt many years ago.
So, let’s get right down to it. Pull out every credit card statement that you have and line them up from the lowest balance to the highest balance. Most people are paying a few extra dollars every month on each card, by paying over and above the minimum required payments. STOP IMMEDIATELY! Start with the card that has the lowest balance, regardless of the interest rate (again, a controversial method) and apply all of the extra money you were paying above the minimum on the other cards to this card. Keep paying the minimum payments on all of your other credit cards, as you don’t want to lower your credit score with delinquencies. Continue this program until you have paid the card in full. Proceed to the next card with lowest balance and add whatever you were paying to the previous card to this card until it is paid in full. Again, continue this process until you are free of credit card debt.
I know most people want to pay off the credit cards with the highest interest rates and that is also a very smart way to pay down debt*. However, in my experience with clients and their debt, the psychological victory that one feels after they have eliminated a bill forever, far outweighs the feeling of simply saving money on interest. You are already in a bad situation and you’ve probably been in debt for a while now. Although it makes sense to attack the higher rate cards first, doing what makes sense is not how you found yourself in this situation. I know when I had eight plus credit cards to pay monthly; it certainly wasn’t using good sense that got me there. Just try this method and you will eliminate your credit card debt and see your confidence increase with every bill that you pay off. Remember, “one bite at a time!”
*Tip: with similar balances always start with the highest interest rate card.
I agree with this method. This is what many call a debt "roll down" or "snowball" process. It doesnt produce "immediate" results but it does teach you discipline. and if you effectively do this process..pay down credit card 1 then credit card 2, the money from those debts can then be allocated to your secure debts as well i.e. cars and houses. which in all total can save you thousands of dollars in interest payments over the long haul
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