Everything is great, until suddenly, it’s not. This is how most people experience their credit card debt beginnings. You are living life, making your way, and trying to have a good time all the while. You have a credit card, but you start by paying it off monthly. One day, your circle is going out for a Friend’s Birthday and payday is 3 days away. You don’t have any money in your checking account. You decide, “hey, I only live once, right? ” You decide to take them up on shopping and cocktails at a pricey new restaurant downtown, using your credit card to pay. Life is fun, and darn it, you are going to experience it. Fast forward a month. You are minding your own business, when your credit card statement notice appears in your email . You open it up and a kernel of remorse and fear settles into the pit of your stomach. You forgot it was also your mom’s Birthday next week and you need to get her a gift. You decide to pay just the minimum this month, swearing to pay it off next month. And so it begins.
Next month comes, and you need new tires on your car. Ouch. “What’s one more month of carrying a balance? It’s only $20 in interest, I can do that.” Until $20 turns to $40, and then to $100, and then to thousands of dollars in interest yearly as your expenses creep up along with your credit card debt. With no emergency savings and only credit cards to “save the day”, what started as a small spending habit can turn into full blown abuse.
“But no, that isn’t me! I’m responsible! I will pay the balances off, just after I…” Fast forward any length of time. After denying the abuse of credit, you finally face the facts; your debt is out of control. You spend more than you make. The interest is eating you alive. Immediate gratification is expensive. The interest is not only taking your hard earned dollars today, but promises to take them for years to come. But you see the light at the end of the tunnel. You know if you are ever going to get out from under this beast called credit card debt, you must go hard and you must go fast.
Paying Off Credit Card Debt Fast
‘Overwhelming’ and ‘hopeless’ are commonly used words to describe the emotion that bubbles up when staring at maxed-out credit card balances. Sure, allow yourself to wallow in self-pity for a few minutes. Get it out of your system. Go on, get it over with. Because after your pity party, you will vow to be stronger financially, and feel empowered to never let this happen again. Ready to do something about it?
Good. Read on.
There are several things you can do to help yourself. The more strategies you put to work, the faster you will pay off your credit card debt. And faster than you thought possible. Be honest with yourself and choose the best options for your particular situation, even if they seem hard.
- Tally it up. You can’t begin until you know what beast you must slay. Gather intel on each credit card- interest rates, promo ending dates, total balances. All of it.
- Option A: Start with chipping away at the credit cards with the highest interest rate first. The higher the interest, the more that debt is costing you. Short circuit the interest debt by going hard after the most expensive debt. This approach will save you more money in the long run. While this strategy makes mathematical sense, it could take longer to see the fruits of your labor depending on the amounts owed. Mentally it may be harder to chip away at larger balances and not see the quicker win from a “paid off status” until down the road. While it doesn’t *actually* take longer, it may feel like it. When you finish paying off a debt, roll that minimum payment you no longer need to pay into your next debt you plan to attack.
- Option B: Choose the cards with the smallest balances and pay them off first. Choosing this option will give you the psychological boost missing from option A. Each time a card is paid in full, you will see visible results, spurring you to victory and creating more momentum forward. This strategy might have you paying off cards with higher interest rates last, depending on the amounts owed. While this isn’t always the most financially savvy route, it can give you a desperately needed mental boost. And if you are on your a-game mentally and actually making progress, it is a clear winner over not paying off debt at all. Again, when you finish paying off a debt, roll that minimum payment you no longer need to pay into your next debt you plan to attack.
- Option C: Depending on your credit rate, you can see about transferring the balances of your current credit cards to lower interest rate cards. You could also take out a personal loan with a better rate than your cards. Those with excellent credit can qualify for zero percent balance transfer introductory offers on some credit card balances. This can save thousands of dollars. But again, beware. Many people unintentionally use this trick to run up the original credit card once again, adding to their debt. If you have unhealthy behaviors, this is a slippery slope. If you balance transfer, hide or cut up your original card as to not to tempt yourself to keep using it.
- Option D: Make more money and get crazy about paying off your debt. The more you make, the more you can throw at it. Think of side gigs you can do, like driving for Uber, or renting out a room in your house on Airbnb. Take a part-time job at the mall. Or sell unwanted stuff on eBay. You can boost your efforts by earning more money with a side gig AND shaving expenses. Double time. A decent side gig can net you hundreds of dollars a month, getting that debt paid off lickety-split. Just don’t spend the extra money you make and negate your efforts.
Figure out what’s best for you and get to work without wasting precious time. The longer you wait, the more you owe. When you get serious and intentional, you may uncover a stronger, more skilled version of yourself hiding deep underneath that pile of costly debt.