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How to Pay off Credit Card Debt Fast

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Now that the holidays are over, how is your credit card balance looking? This is often the time of year when people take stock of their debt and begin to despair. If that’s where you’re at, take a deep breath and keep reading for some simple tips that should help you get a good, quick start on getting rid of your balance(s).



Make a commitment

The first step in any big project is to set your intention. Or maybe you’d rather call it a commitment or a goal. How you refer to it is your choice, but it’s important to prepare yourself for the journey. Maybe call a friend and tell them what you’re doing so they can hold you to it or give yourself a high five in the mirror. You want to make just enough of a ceremony of it to ensure that your conscious and subconscious minds are both working together toward the goal of debt reduction, but not enough to make you feel ridiculous.


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Identify your resources

The second step in debt reduction is to pull together all the financial resources you have. Your paycheck is probably the biggest resource you have in paying off debt, but it’s likely not your only source of funds. Here are some other resources you may forget you have:

  • Valuable items that you don’t need or want: This is a good time to take stock of the things you have hanging around your house that have value but aren’t of particular value to you—the skis that have been gathering dust in the back closet for a few years, the food processor that you won but haven’t ever used, the desk your daughter used when she lived in the house but now clutters the guest room. Collect these items and find a good online forum, like eBay or Craigslist, to sell them. You may be surprised at how much money you can make.
  • An unsecured loan: Getting a loan to pay off credit card debt isn’t ideal, but you can often get a better rate on an unsecured loan, which will reduce the amount of time it will take you to pay the debt. Loans aren’t revolving debt, which means you can’t keep borrowing more (like you can with a credit card). It can be easier to discipline yourself when you’ve got a loan with a predictable payment schedule and payoff date.
  • Special savings accounts: Have you set up dedicated savings accounts for specific goals? Consider whether it makes sense to transfer funds from one of those accounts or stop paying into it for a while in order to reduce your debt. You’ll have to weigh the importance of the goal. If the goal isn’t top priority, it may make sense to divert the funds to your current debt reduction goal.
  • A secured loan: If you’ve got collateral (a car, motorcycle, camper, etc.) that you can use to back your loan, you could get a much lower rate than you’ll find on a loan that isn’t secured by collateral.
  • End of year bonuses: You may not want to use your bonus to pay off holiday debt, but you got yourself into this situation by not saving. This is the best way out and it will allow you to start saving for next year, so you don’t get into this position again!
  • Tax refunds: Same as end of year bonuses—do the right thing here.


Divide and conquer

If you have debt on multiple credit cards, create a quick spreadsheet of the balances and interest rates of each. From those numbers, you can calculate your total debt. If the amount is high enough that getting a loan makes the most sense, do that. If not, note which cards have the highest interest rates and which have the smallest debt. You will want to pay down the highest interest rate cards first, because those are the ones that are hurting you most. Or, you could opt to pay off the cards with the smallest balances, which will help you feel like you’re accomplished something right off the bat.


Create your budget

Using the resources you identified in the second step, determine how much you can put toward debt each month. This will require you to create a simple budget. These are relatively easy numbers—how much is coming in plus how much you have in available savings and other resources minus how much you pay out in expenses each month. Read How to Make a Budget for more detailed instructions. The purpose of creating the budget is to determine how much you can dedicate to your debt each month, so make sure it’s money you won’t need for other things.


Start paying

Once you’ve figured out how much you can pay, make it easier on yourself by automating your payments. Ask your employer set up your paycheck so that it is deposited automatically into your account, with the money you can use going to checking and the amount you need for debt payments going to a special savings account, which you’ll draw from when you pay your credit card each month. If you can’t automate that process, you’ll have to do it when you deposit the check. The idea here is to get that money into a place where you’re less likely to use it for something other than your goal.


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About Heidi White

Heidi White is a content writer with eight years of experience in the credit union industry. She is passionate about creating timely and useful content that inspires people to take daily, conscious steps toward more joyful lives. Heidi lives in Barre, Vermont.

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