Your Four-Step Guide to Paying Off Credit Card Debt

The New Year has rolled out, and you must be knee-deep in tackling numerous resolutions. Regardless of the specific theme of your resolution, there is no doubt that financial goals share a hefty chunk of the hypothetical Resolution Pie.

An insightful survey conducted by Experian and Edelman Intelligence discovered that tackling credit card debt – and managing to avoid it in the future – was a common theme that recipients listed as one of their top financial goals for 2017.

Why exactly does both paying off and avoiding future credit card debt seem to ring so truly amongst people? It seems to stand as an oddly-specific aim, particularly once coupled with other goals of increased savings and promises to carry forward with wiser financial decisions.

We have three main theories to answer this question.

  • Timing plays the ever-notorious role as the most significant factor. The survey happened to be conducted in October of 2016 – prime holiday crunch-time. The last quarter of the year is right about the time when people begin to experience amplified spending; credit cards swipe endlessly for long holiday shopping lists and steeply-priced gifts. Holiday debt is an entirely accurate term to sum up the debt most Americans experience immediately after December nears towards its close.
  • Desiring change is a common phenomenon to experience once we press the virtual reset button on the year. Twelve clean, uncluttered, and untouched months stretch before you, and you possess all the drive to work towards making smarter financial decisions.
  • The improving economy has ensured that even fresh college graduates are able to hold down some basic form of part-time employment. The country is stumbling out of a recession, and economic prospects seem significantly brighter. Individuals now understand how to earn via alternative sources, and how to monetize comfortably off the most basic skills.

Now that you may fully understand why your financial goals appear a certain way, it is now time to focus on how to effectively transform such goals into a reality.

  1. Firstly, make it a point to go thoroughly through all your accounts, and jot down the balance and interest rate for each. This list will provide you with a fair understanding of where you currently stand in terms of debt repayment, and how much farther you have left to proceed. Continue paying the minimums on all of your accounts – except for a single one. Select one balance as your aim, and work towards erasing that debt. After you achieve your first goal, proceed to the second balance on your list.
  1. Figure out which debts to prioritize. This organization will help you achieve a greater sense of control, and aid you in going about your goal-reaching process in a more efficient way.

You could choose to opt for the “snowball” method, whereby you begin with your smallest balance initially, and then slowly work your way upwards. Financial guru Dave Ramsay happens to be the mind behind this specific strategy, and argues that it assists those individuals prone to becoming quite easily demotivated when they do not observe immediate results.

For a more pragmatic approach, apply the “avalanche” method, whereby you begin with the heftiest debt to pay off, before moving downwards and eventually reach your lowest interest rate account.

  1. Whichever strategy you opt to select – commit to it entirely. Budget your monthly expenses carefully, and trim any unnecessary spending. Perhaps invest your time in picking up freelance work as an additional source of income. As with any resolution or long-term goal, commitment and dedication is the fuel that will see you through the last leg of the race.
  1. If you happen to feel unsatisfied with your progress, you may opt to look at various other alternatives, such as balance transfers, debt consolidation, or consulting with a credit counselor. There are numerous mobile applications that also serve to provide financial advice across a range of situations; hence they could also be worth looking into so that you are able to achieve your financial goals in the best ways possible!