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How To Pay Off $50 000 In Credit Card Debt

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Develop A Monthly Budget

I Have $70,000 in Credit Card Debt!

We developed a monthly written budget that defined our way forward. We knew we had to reduce our expenses and increase our debt payments. The written budget guided us to ensure we would stay the course.

For budgeting, we used a simple spreadsheet. It wasn’t too fancy. We just listed out our income and our expenses and made sure we allocated each of our dollars to an assignment.

As the years passed, we decided to upgrade to Mint. This online budgeting tool gave us more flexibility and made the monthly budgeting process a lot quicker through its ability to link up to your bank and credit card accounts.

I developed a simple 10-step guide to get started on Mint.

A good old fashioned pencil and paper will even do! Just make sure you have a budget and stick to it.

Create A Bulletproof Budget

After New York City & State Taxes, I took home $2,924.11 a month. This are the exact numbers from my very first adult non-acting job. I took that money and used the 50-30-20 method to set a budget.

  • 50% = $1,462 in living expenses like rent and utilities
  • 30% = $877.00 for spending money
  • 20% = $584.82 for debt repayment

If you dont already have a budgeting app, get one. Best of all, I was paid once a month, which was actually easier to pay down debt because I did it all at the start of the month.

Want to save time on budgeting and expense tracking?

How To Pay Off Credit Card Debt

9 Minute Read | October 04, 2021

If youve got credit card debt, it can feel like the life is being drained from your income every month. Purchases from months ago are haunting you and holding you back from doing what you want with your money today.

We get it. Weve felt the weight debt can put on you. And. It. Sucks.

The good news is, it doesnt have to stay like this. Use the tips and info here to learn how to pay off credit card debt. Put this months income back into this month. And then you can start putting more of it toward the future you want.

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Good Ways To Find Relief Versus Bad Ways

The right debt relief solution will help you reach zero without creating new financial risks or damaging your credit. When it comes to bad ways to seek debt relief, there may be some circumstances where using one of these solutions would be the best option. However, you should exhaust every other option first before you consider these last resorts.

Good Ways to Find Debt ReliefBad Ways to Find Debt Relief

On the other hand, if you still want to try paying off the debt with regular payments, follow the steps below. They will increase your chances for success.

How We Used Zero

Reducing Credit Card Debt

While we didnt know what zero-sum budgeting was when we started, we naturally gravitated to this dynamic debt repayment strategy. The purpose of a zero-sum budget is simple. It requires you to track your full monthly income and give every single dollar you earn some sort of purpose. Once you list your monthly income and your monthly expenses, you assign each dollar to a specific bill or need.

For example, we had fairly standard bills when we started monthly bills like our mortgage, car payments, car insurance, cable television and phones. We made room for each of those payments in our zero-sum budget, then we estimated how much we would spend on fluctuating categories like food and entertainment.

In order to make our budget work, we had to make some big cuts right away. For starters, we limited ourselves to spending only $500 per month on food at first. To cut our food bill in half we stopped going out to eat. We also cut our cable television subscription and went on a spending freeze that limited our consumption in a drastic way.

Once we made those changes, we had money left in our budget each month at least on paper. In the spirit of zero-sum budgeting, we allocated every extra dollar we earned to debt repayment and savings.

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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.

Decide On Your Strategy

If you only have one loan or credit card you dont need to worry about coming up with a strategy. You can simply choose to automate your payments and consider yourself done.

However, if youre working with multiple loans and debts youll have to determine in what order youd like to pay those off. There are two popular strategies for doing this: the debt snowball and the debt avalanche.

Debt Snowball Method With this method youll list your debts from smallest balance to largest balance and work on paying off the smallest balance while making minimum payments on everything else. Once the smallest balance is paid off you move on to the next smallest while still meeting all other minimum payments.

This is the method popularized by Dave Ramsey, and the goal is to get some early wins by eliminating small debts – which in turn boost your attitude towards paying off the remaining debts. Plus, putting that extra money towards the next debt helps eliminate it faster.

Debt Avalanche With this method you list all of your debts from highest interest rate to lowest interest rate. You then focus on putting all of your extra money toward your highest interest rate while making minimum payments on the rest.

This method is mathematically the lowest cost approach to paying off your debt, but it could also mean a longer stretch before you see wins.

Once you pick your strategy you should also consider how often youll make extra payments and whether or not to automate your plan.

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Pay Your Balance In Full Every Month

While it can be tempting to pay just the minimum on your credit card each month, make a point of paying as much as you can preferably the full balance. Any credit card balance carried over to the next month will start accruing interest and that costs you more every day.

Carrying a balance on your credit cards also impacts your credit utilization rate on your credit report which can decrease your credit score if it exceeds a certain percentage of your available credit. A decreased credit score may result in higher APRs on loans or other credit cards you take out in the future.

Refinance Your Student Loans

Dip Into My 401(k) to Pay Off My $25,000 Credit Card Debt?

Best for:

  • Borrowers with high interest rates
  • Borrowers with multiple loans theyd like to combine
  • Borrowers with good to excellent credit

How long will it take to pay off $50k:

For example, if you refinance with a Credible partner lender, you might have a term ranging from five to 20 years.

If you refinance your student loans, your old loans are paid off with a new one. Refinancing might get you a lower interest rate, which could reduce the overall cost of your loan.

Or you could choose to extend your repayment term to lower your monthly payment though this means youll likely pay more in interest over time.

Keep in mind:

If you decide to refinance, its a good idea to consider how much the new loan will cost you over time and how much you might save. Use our calculator below to see how much you can save by refinancing your student loans.

Step 1. Enter your loan balance

$697 $79,255
Monthly payments based off the assumption that the loans have a fixed interest rate of 7% and that the borrower is on a 10-year repayment plan.

Your potential savings from refinancing will vary based on your loan terms. For example, say you have a $50,000 loan balance with a 6.22% interest rate the average student loan interest rate for graduate students. On the standard 10-year repayment plan, youd pay $561 per month and $17,277 in interest over time.

Tip:

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How He Got Into Debt

As he was graduating from college, Jorge made two financial moves that really cost him. The first? Buying more car than he could afford, he says.

“I bought my dream car right out of college,” Jorge says. It was a used 2007 Chrysler 300C in magnesium gray. But because he was broke, he financed the purchase with a $15,000 auto loan. The car is now worth a sixth of what it was back then, he says. Had he saved up the money instead, he would have over $50,000.

Jorge also got drawn in by the allure of a timeshare. He agreed to attend an informational session to collect $50 and walked out with a$5,000 share in a vacation property. He began making $250 monthly payments but, between his car payments and everyday costs, he couldn’t keep up. A little over a year after he bought the timeshare, he stopped making payments.

Six years later, Jorge finally settled his contract and outstanding debt with the timeshare company. All the while, though, his credit score suffered.

How To Pay Off $50000 In Student Loans

There are several options that could help you pay off $50,000 in student loans more easily such as refinancing or signing up for an income-driven repayment plan.

Edited byAshley HarrisonUpdated February 2, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Paying off $50,000 in student loans can feel like a heavy burden. However, there are alternatives to the standard repayment plan that might help you pay off your debt more easily.

Here are six ways to make paying off $50,000 in student loans more manageable:

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Pay Off Your Most Expensive Debts First

One of the smartest strategies for getting out of debt is to make minimum payments on all of your debts and credit cards except for one. Chose the one debt that is charging you the most interest and focus all of your extra payments on paying off that one first.

Once your first, most expensive debt is paid off, take all of that money that you were paying on that first debt and focus it on the next most expensive debt. Continue this method as you pay down each of your debts, and you will be left with your least expensive debt to pay down last. This strategy will get you out of debt quickly, and you will feel encouraged as you see your progress. There is also a different variation of this strategy that a lot of people find even more motivating. Its called the Snowball Method. You can check it out to see if it might work better for you.

Related: Where to Find Money to Save Each Month So You Can Pay Off Your Debt More Quickly

Using Debt Consolidation To Get Relief

Tips for Avoiding Credit Card Debt

Debt consolidation is often the preferred choice for debt relief because of the benefits it provides. With consolidation, you pay back everything you owe while minimizing interest charges. You can often enjoy lower monthly payments, even while you pay off your debt faster and save thousands. Theres also no credit report damage, which you see with other solutions like debt settlement and bankruptcy.

There are three basic ways to consolidate credit card debt:

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Does Consolidated Credit Adhere To These Guidelines

Yes. Consolidated Credit is a registered 5013 nonprofit organization. We are nationally accredited through the Financial Counseling Association of America . We are also approved by the Department of Justice to provide pre-bankruptcy counseling in our home state of Florida.

Connect with a certified credit counselor to get the help you need to get out of debt.

All articles and educational content on Consolidated Credit are written by and carefully reviewed by certified credit counselors, HUD-certified housing counselors and financial coaches.

Consolidated Credit follows strict sourcing guidelines and only links to reputable sources for information, such as government websites, credit bureaus, nonprofit organizations and reputable news outlets. We take every step possible to ensure all information comes solely from certified financial professionals.

If you feel that any of our content is inaccurate, out-of-date or otherwise questionable, please let us know through the feedback form on this page.

Whats The Trick To Paying Off A Credit Card Quickly

We already mentioned the quickest way to pay off credit card debt is the debt snowball method. And this is how you do it:

Step 1: List your credit card debt from smallest to largest. Pay minimum payments on everything but the smallest one.

Step 2: Use all the extra money youve got from those earlier tips and attack the smallest credit card debt with a vengeance. Once that debt is gone, take what you were paying on it and apply it to the second-smallest debt .

Step 3: Once that credit card debt is gone, take what you were paying on it and apply it to the next-smallest debt. The more you pay off, the more your freed-up money grows and gets thrown onto the next debtlike a snowball rolling downhill. Its unstoppable. Youre unstoppable. That credit card debt doesnt stand a chance.

Keep repeating those steps until the debt is completely gone. And dont forget to close your credit card accounts after you pay them off. Then go ahead and dance like nobodys watching, even if they are. You did it!

Okayso all of this takes effort, sacrifice, focus and time. What if you could speed it up even more? Learn the plan to do just that in Financial Peace Universityavailable only in Ramsey+. The average household pays off $5,300 in the first 90 days of working this plan. Imagine your life 90 days from now with at least $5,300 of your credit card debt gone. Forever. Check it out in a Ramsey+ free trial!

Dont. Give. Up.

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Consider Becoming A One Car Household

If your family has two cars, consider getting rid of one and either walking to work, taking transit, or car pool. You can literally save yourself thousands of dollars a year by only using one car. The average vehicle owner spends over $9,000 per year to own and operate their vehicle. If you use this money to pay down your debt, it will make a massive difference. However, instead of going cold turkey and selling your second car right away, try test driving this idea first. Parking your car for a while, drop the insurance down to pleasure use only, and see if taking transit, walking, cycling or car pooling works for you. If you do decide to sell your second car, even the odd taxi trip or rental car wont amount to nearly as much as you would pay keeping your second vehicle permanently. If there is any chance that transit might work for you, this option alone is often 80% cheaper than owning and operating a vehicle.

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Alternatives To Personal Loans

I Thought I Could Pay Off My Credit Card, Now I’m $30,000 In Debt!

Not everyone will be able to qualify for a personal loan and even if you do qualify, your interest rate may not be meaningfully lower than that of your credit cards for the transition to be worth it. Lenders may be skeptical of first-time borrowers, people with bad, limited, or no credit history, or those who are unemployed. If you match any of these scenarios and dont find what you want in a personal loan, here are a couple other options for consolidating credit card debt.

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What Happens If I Cancel My Credit Card Debt

That means that if, in the example of the $5,000 of forgiven debt income, the individual had total assets valued at $50,000 and liabilities totaling $53,000 just before the credit card debt was canceled, their finances were under water by $3,000. The $5,000 canceled debt income would be reduced by the $3,000 insolvency.

Running up $50,000 in credit card debt is not impossible. Millions of Americans do it every year. Experian, one of the three major credit reporting bureaus in the U.S., says that 2.18 million American consumers had credit card debt of more than $50,000 in 2019. Paying that bill off?

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