Save A $1000 Emergency Fund
If getting rid of those credit cards freaks you out because you use them as an emergency fund, then get yourself an actual emergency fund as fast as possible.
Save $1,000 quickly. Leave it in savings as a buffer between you and those life happens moments. And trust us, its way better than a credit card. If you have an emergency and pay cash, you wont be charged interest. Boom.
Why You Should Pay More Than The Minimum On A Credit Card
You’ll Pay Less in Interest. Unless you’re carrying a balance on a credit card with an introductory 0% APR, most of your minimum payment goes toward interest charges, while reducing your balance only by a fraction. You’ll owe less interest in the long run by paying more than the minimum payment, and you’ll avoid interest charges altogether if you pay the balance in full by the due date every month.
Your Credit Will Improve. Paying more than the minimum amount due will reduce your , which is good for your credit score and will make it easier to get credit in the future. Plus, a low credit utilization ratio frees up more of your available credit for emergency use. It’s best to maintain a utilization ratio below 30% for these reasons.
You’ll Pay off Your Balance in Less Time. When you only make the minimum payment, it can take a long time to pay off your balance in full. New interest charges accumulate daily, and minimum payments only cover a very small percentage of the principal balance.
You can use WalletHub’s minimum payment calculator to see how long it will take you to pay off your debt solely with minimum monthly payments. You’ll also see how expensive that would be.
How This Couple Paid Off $22k Of Credit Card Debt In Less Than 3 Years
Debt: It’s the four-letter word that can wreak havoc on your finances. In our Debt Confessions series, real people share how they tackled debt â from credit card bills to student loans to everything in between â and how it felt to reach their zero-balance goals.
Here, a man from Jacksonville, Florida, shares how he and his wife paid down $22,000 in combined credit card debt just a few short years after walking down the aisle.
First comes love, then comes marriage â then comes tackling debt together. At least, thatâs how it was for J.R. Duren and his wife, Heather, when they married in 2009. Each brought around $11,000 of credit card debt into the marriage, and they made it one of their first priorities as newlyweds to pay that down.
Although they had known about each otherâs balances, âwe had to come up with a plan to get rid of all that debt,â says Duren, a senior editor at consumer review website HighYa.com. So the couple put together a strategy that helped them tackle their combined balance of $22,000 in about two and a half years. Here, he describes how they paid off their credit card debt.
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Reduce Your Bills And Cut Down On Spending
With a budget in place, you’ll be equipped to consider areas where you can cut expenses back and reallocate that money toward your debt.
Start by looking at your recurring bills, which you may be able to cut without consistent effort. You may be able to negotiate certain utility bills, especially if there are multiple providers in your area.
In addition to looking at your recurring expenses, take some time to also cut back on your discretionary spending. This may include spending less money on eating out and entertainment, cutting subscriptions you don’t use very often or even sharing certain subscriptions and other costs with family members to cut how much you pay each month.
To get an idea of what’s normal spending, you can review the average household expenses from the Bureau of Labor Statistics. It’s important to note, however, that each household is different, and only you know how to appropriately spend less and save more given your circumstances.
|Average Monthly Household Expenses by Income Range|
Balance Transfer Cards: One Way To Help Pay Off Debt
Rather than pay interest on your credit card debt, you may be able to transfer high-interest debt to a single credit card with a balance transfer.
A number of balance transfer cards allow you to pay an introductory interest rate of 0% on your balance for a set amount of time, so you can pay more money toward your principal and reduce how long it will take to pay off your debt.
Learn how to do a balance transfer in six steps.
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What Is A 0% Apr Balance Transfer:
Its pretty much what it sounds like. You can transfer balances from other credit cards onto one and have 0% APR for a set amount of time. So if you have multiple credit cards where you are paying a high amount of interest each month, you can move the money over and eliminate that extra cost.
Balance transfers can be another great way to save on interest.
Pay Off Credit Card Debt Fast Like Super
Morris paid off $2,250 in their first year. Nathan paid off $60,000 in total, Adrianna and Rachelle paid off $22,000 and Fred paid off over $21,000! See what they did below so you can pay off your credit card debt fast, too. Start paying off credit card debt today with the free
Learn how to slay your debt this year:
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Put Your Credit Cards In A Deep Freeze
If you owe $20,000 and make a 3% payment a month $600 it would take 45 months to pay that off and youd accrue $6,707 in interest.
If your minimum payment is 2%, or $400, youd rack up $13,403 in interest.
Paying $274, or close to 1%, the standard minimum on some cards means you would accumulate $61,488 in interest and it would take you 298 months to pay it off.
You dont even want to know what a 29% interest rate would cost at those minimum payments.
How To Pay Down Your Debt Efficiently
One effective way to pay down debt faster is to use what’s known as the avalanche method, which means you’re targeting the debt with the highest interest rate first and making aggressive payments toward it while only paying the minimum for all your other debts. This particular method can help you save money on really high interest charges.
“Make a list of all of your debts, including the outstanding balance and interest rate for each,” Salisbury suggests. “Focus on one debt at a time and start by paying down high-interest debt first.”
Balance transfer credit cards with 0% intro APR periods can also be instrumental when it comes to paying off debt faster. These credit cards typically offer an initial period of 12 months or more where you won’t be charged interest on your monthly payments, allowing you to transfer an existing balance to that credit card and pay it off when no additional interest is accruing.
0% for the first 20 billing cycles on balance transfers and purchases
Either 3% of the amount of each transfer or $5 minimum, whichever is greater
Foreign transaction fee
0% for 21 months on balance transfers 0% for 12 months on purchases
5% of each balance transfer $5 minimum
Foreign transaction fee
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Start A Side Hustle To Throw More Money At Your Debt
I know, work away from work. But its not forever.
If you have the time and can manage a second job, youll be able to throw extra money at your debt. Plus, some ways to make money can actually be fun. Combine this with any debt repayment strategy and youll be a force to be reckoned with.
Any part-time job can help, whether its delivering pizzas or walking dogs with Rover. No job should be beneath you if you really want to pay off this debt.
You can start small with survey sites like Survey Junkie , then throw your earnings at your debt. This obviously wont bring in a ton of extra funds, but every little bit helps.
With Uber Eats you can deliver food across town whenever and wherever it works for you and get paid. Just download the app and upload your documents once youre notified that youre active, you can start earning!
Have The Audacity To Do It
Think of your last amazing, first date. How did it happen? Were not talking logistics.
Rather, who asked who? Which of you had the courage to ask the other out? After that date, though, werent you happy? .
The same goes for your money. Its not a marriage. So, take a simple step to become debt free? Your wallet, your husband future husband will thank you. Cuz there aint no thing sexier than a man with his shit together. That shit includes your money.
Speaking of your main man, did you know that couples who talk about money have better sex?
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Potential Savings With A 0% Apr Offer For New Purchases
In order to pay off $50,000 in credit card debt within 36 months, you need to pay $1,811 per month, assuming an APR of 18%. While you would incur $15,193 in interest charges during that time, you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.
The average length of a 0% APR balance transfer intro period is 13 months, according to WalletHub’s , and the average balance transfer fee is 3.05% of the transferred amount. Below, you can see how much you could save while paying off $50,000 over different time frames, assuming a 12-month 0% APR period, a 3% balance transfer fee, and an 18% regular APR.
Tip 2 Look Carefully At Your Credit Report
Because your credit report and credit score weigh so heavily when applying for financing, its key to get a free copy of your credit report before seeking financing for a mortgage. Review all the details on the report and verify that each item listed is correct.
To get your report, youll need to contact each of the agencies separately and request it.
- Equifax or call 1-866-349-5191
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How Do I Budget While Paying Off Credit Card Debt
Budgeting and paying off credit card debt arent mutually exclusive.
In fact, paying off your credit card debt is very closely tied with having a good budget. The clearer you are with where your money comes from and where its going, the more youll be able to lower your expenses and the more money youll be able to put toward your credit cards.
But what budget should you use? There are just so many.
There are so many budgets, and any budget is better than no budget. We prefer the Dynamic Budget, included in the Credit Card Pay Off Plan, we created for ourselves because it was easier to adjust for fluctuations in our income and fluctuating increases in payments to our credit cards.
Have Over $25000 In Credit Card Debt Here’s How To Pay It Off
Many or all of the products here are from our partners that pay us a commission. Its how we make money. But our editorial integrity ensures our experts opinions arent influenced by compensation. Terms may apply to offers listed on this page.
Most consumers will take several years to get out of credit card debt and end up paying more in interest than they originally charged. Although it does take time to pay off this much debt, following a good debt repayment strategy will speed up the process and help you save on interest.
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You Are Going To Keep Using The Same Spending Habits
Chances are if you have a large amount of credit card debt, you may not have the best spending habits. Consolidating your debt wont stop you from getting into more debt if you are just going to continue the same spending habits.
You may want to rethink your financial strategy before you try to consolidate debt so that you can get a handle on your spending. Think about consulting a personal finance coach or learning about different budgeting methods. Find what works for you and make habits that will keep you out of debt in the long run before you try to tackle a symptom of your larger spending problem.
Paying Off Credit Card Debt
I currently want to pay off about $7,000 in credit card debt and I’m not sure how. I’ve done some research online, but it is only making me more confused.
It seems like the “simplest” way is to just pay as much as I can every month until it’s paid off. I love this option, but while I can pay more than the minimum, I can’t pay enough extra that it feels like it’s making a difference.
I’ve considered refinancing my home. I’ve spoken with a mortgage broker who I trust. I could refinance and take out enough to pay off my debt and it would end up only raising my mortgage about $20 per month. That doesn’t feel like too much, especially considering I won’t making any more credit card payments.
My concern about a refinance is whether or not I can comfortably cover the closing costs right now. I’m making less money due to work being slower due to the pandemic and monthly finances feel tighter right now…so how much of my safety net am I willing to let go of to make this happen?
I’ve also thought about taking out a home equity loan. I haven’t looked into this too much, but my hope would be that I could get a better rate through my credit union than I’m currently getting through my credit card company.
I’m committed to doing this. I’m not currently using my credit card .
I feel like my hands are somewhat tied because I don’t have a lot of extra cash to use each month. I just don’t want to continue to keep making higher interest credit card payments every month.
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They Created A Budget
First, they had to get organized, which meant taking stock of all their debt. âI spent an evening doing an audit of all our credits cards, writing down each card’s APR, balance and minimum monthly payments,â Duren says. This helped them get a clearer picture of exactly what they were paying and what they owed.
Next, they needed to get a sense of what they were earning and spending so they knew exactly how much they could dedicate to their debt. âWe created a budget, which helped us see how much extra income we had at the end of each month,â Duren says. They started with the credit card with the highest interest rate first, aggressively paying down that balance while continuing to pay the minimums on their other cards. This helped them reduce the amount of interest they would owe in the long run.
Nobody runs a race that doesn’t have a finish line. The same applies to paying off your debt.
Paying Back A Consolidation Loan
Making the minimum payment on a consolidation loan will help you get out of debt eventually. However, the minimum payment on a line of credit will usually only cover the interest that you owe. You wonât get out of debt if you only pay this amount. Increase your payments if you can to help reduce your debt faster and pay less in interest.
A consolidation loan won’t hurt your credit rating if you make your payments on time.
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The Opportunity: An Emergency Fund
Now that Epperson is free of her student and auto loan debt, her midterm goal is to save up enough to buy a new car using cash, and to replace her hand-me-down TV. But first, she says, her priority is to build up a six-month emergency fund. So far, she has nearly a third of what she needs saved up.
Epperson says she plans to keep up with her cash budgeting strategy. In fact, she hasn’t used her credit cards in months.
Do you have an inspiring story about how you paid down debt? Email us at .
Creating The Cash Budget
Secondly, I committed to using all cash. I knew that I was addicted to using credit and there was no point in trying to get out of debt while I was still using it. I had already gotten rid of all of my credit cards and I created a budget that would allow me to use only cash.
I maxed out my budget categories in saving and left myself with enough cash to cover my essential expenses. That includes housing, food, and clothing.
After shopping for 6 years straight, Im pretty sure I had all the clothing that I needed.
I also left myself a small cushion of about 50 dollars per paycheck. This money was not for anything specific and it gave me a feeling of space.
Speaking of shopping, I knew that I had to mentally change the way that I handled money, credit, and debt.
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Shop Around For A Consolidation Loan
Be aware that some companies may offer consolidation loans with interest rates that are higher than the debts you are trying to consolidate. Make sure to shop around when youâre trying to consolidate your debt.
Different financial institutions may offer you different interest rates depending on the type of product you choose. For example, you may pay less interest on a line of credit than on a consolidation loan.
If you shop around for a consolidation loan, make sure you do so within a period of two weeks, so that it doesn’t affect your credit score.