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Wednesday, February 25, 2009

One Card at a Time to Being Debt-Free

By Paul J. Easton

So, how do we actually pay off all our credit card debts? Let's guide you in a simplified plan to wisely get ahead of that credit card company.

Take a look at the interest rates on your credit cards, compare and analyze. Pick the one with the highest rate. That's the best starting point. Focus on working on that one card with the highest interest first. Getting through this hurdle will make it easier for the next ones to pay off.

Examine the spending you made on that card. Stop for a while paying necessary expenses using this card and use cash with paying those bills. The expense you have to make this time is just for the necessary ones like utility bills and the like. The wanted purchases, not necessarily the needed ones, can be bought after you have paid off this one card.

As a treat to yourself, you can buy something as a reward after every card is paid off. Since paying a considerable amount of credit card debt takes a bit of time, a reward can be more motivational than counterproductive. Of course, limit the reward to something not so expensive. We don't want another debt cycle.

After avoiding some expenses using your credit card, your debts are projected to reduce much faster with continued consistency in paying them off. Pay off that first credit card with the highest interest and just focus the rest of your savings for the month in that debt account. Just leave the other credit cards paid at minimum.

Then after paying that first credit card, take the next card with the highest interest rate. Direct all the focus you have for that previous card you are paying with all your savings to this next card. Send the regular monthly payment you used to pay that previous credit card (which is now paid off) with this second card's monthly minimum. In not time, this card will be done, faster than your first card.

Repeat the whole process with the rest of your card. You will be like an avalanche rolling downhill towards being debt free.

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