Getting rid of that credit card debt…
I get asked almost every time I speak, about the best ways to pay down credit cards when you have a number of them.
The first thing I’ve gotta say is STOP using them! Cut them all up and trash them. It’s tough, and it might sounds harsh, but as long as you have those little plastic cards in your wallet, they’ll come out and your debt will just keep racking up.
Before you say it, NO! You don’t need them for an emergency, what we all need for an emergency is a buffer account. A bank account with a few thousand stashed in it for unexpected expenses, but I’ll talk more about that another time.
For now, cut those bad boys up and commit to paying them off.
To work out the best way to pay your credit cards off, you’ll need to know the balance of each card, and the interest rate of each card. Write them down in order with the highest interest rate at the top of the list, all the way down to the card with the lowest list.
What you’re going to do is focus on paying of the card at the top of the list first, because this card has the highest interest rate, it’s costing you the most amount of money.
So each month when you get your credit card statements, make only the minimum repayment that appears on the statement on all of your cards except for that one at the top of the list.
That card is the one that gets most of your love. Put all of your spare cash on that card, until it is paid off in full. Then move on to the card with the next highest interest rate and do the same thing.
If you’ve never completed a budget, now’s the time as you’ll need to work out how much spare cash you actually have each month in order to start smashing that credit card debt.
Our 8 week Money Makeover comes with a budget template to help you do this, and goes through a step by step process to ensure you get it right.
Although it’ll take time and be a big commitment on your part, the feeling of being credit card debt free is truly liberating, I can say that from experience – been there, done that, you can read all about it in my book Get Rich Slow where I share my own dirty dark money secrets!!
Now, I know credit card debt can be pretty embarrassing, and often something we keep to ourselves, but just remember no-one is perfect, we’re all just chipping away and trying to get rich slow.
So this week – if this has motivated you to make a change, share it with a mate and get them to keep you accountable, just another thing that’ll help you stay focused. Good luck, and I’ll see you next time.