To help get those credit card debts paid down faster, paying more than the minimum payment per month will help you get out of debt faster.
A $10,000 credit card at 19.99% will take 109 months to pay off when you pay only $200 per month. Increasing the monthly payment by $100 to $300 per month will pay off that debt in 50 Months, under half the time. The more you can pay on your loans per month can help decrease the length of time of the loan, and the amount of interest you are paying out.
See our article on how much interest am i paying on credit card to see how changing your monthly payment amount makes a difference. Every extra bit going towards paying off your debt will make a difference.
Spend less and track your expenses
If you are spending more than you make per month, your debt will continue to increase and you will need to get this under control. Knowing your monthly expenses and having a plan in place for your allotted expenses is a start to helping see how much you are able to spend, while not gaining extra debt. Spending less than you make is the goal here. If there’s something you want to purchase, make sure you have the available funds to make that purchase without putting it on credit.
Our interactive budgeting worksheet can help you get started on tracking your expenses and give you the starting place to see how much you have available for certain allotted expenses. Look for expenses that can be reduced or taken out altogether.
Pay off the most expensive debts first
When you have multiple debts you are paying off, it can be a bit overwhelming what debt you should focus on more, or if you should just pay all at the required minimum monthly amounts. One option that you can choose for multiple debts is to choose the debt that has the highest interest rate. The higher the interest rate, the more you are paying on that loan in interest payments. Work towards paying this one off the fastest and first. Note that it is always important to pay all of your debts each month in order to keep good credit history. Don’t miss any payments.
Once you have the first debt paid off, you can then work on using that money to pay down the next more expensive debt that you have. Getting your first debt totally paid off will be encouraging, and will show you that you can get your debts paid off and be debt free!