As part of Mrs. Micah’s Single Step Personal Finance Challenge, I have decided to get aggressive with paying down my credit card debt. I recently built up an emergency fund, and I have been paying more than the minimum on my credit cards, but it does not feel like enough. I have a pretty significant amount of credit card debt as well, about $13,500 as of a few days ago. It was a little higher several months ago, but I have been taking steps to reduce it, by paying off more than the minimum and not using them except for gas purchases.
So how do I get this credit card debt “monkey” off my back?
Looking deeper in my situation, I have come up with 3 potential “plans” for eliminating my credit card debt:
Plan 1- Normal Payment Schedule – Paying a little above the monthly minimums (which is about what I am doing now)-$500/month.
Plan 2- Above Average Payment Schedule (Stretching it) – By tightening up my budget, trimming expenses, I could probably pay about $1000/month.
Plan 3- Aggressive Payment Schedule- paying over $1000/month, hopefully averaging about $1200-$1500/month.
Since debt elimination is a priority, I am going to follow Plan 3- an aggressive payment schedule, in order to try and eliminate this debt as quickly as possible. I plan on implementing a form of the debt snowball to accomplish this.
So how do I plan on achieving this goal? It is easy to say I want to do it, but where am I going to get the extra money?
First, and most critical, is not to incur any additional credit card debt. This is key.
Work Overtime-I have the opportunity at my job to work some overtime in the coming months, and I plan on taking advantage of this to boost my take home income.
Micropayments or Snowflaking- Taking any additional money,and applying it to my credit card balances as soon as it is available. I plan on selling some items on Ebay, cutting some expenses, and I have a few other ideas on generating more income.
Consider a 0% balance transfer- About $10,000 is on cards with interest rates between 10% and 15%. A 0% balance transfer could save me significant money over the course of the year, but I am not to keen on signing up for another credit card. I will have to look into and think about this one.
By combining the above actions, and following an aggressive plan, if I average $1500/mo in payments, I will have the balances paid off in appx. 9 months. I am going to chart my progress and provide regular updates here on my blog.
Any comments or suggestions?
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Excellent strategies and a great inspirational read. You give me some ideas that I had not thought of yet. Keep up the good work!
I like your plans to eliminate credit card debt. I have already started working overtime to aid in my own fight of debt.
Paying off balances of one or two credit cards is manageable. Now if you have to pay off balances on several credit cards – that’s virtually impossible, especially if you only have a fixed income. You can get lucky and receive a windfall; but let’s be realistic – it’s really far-fetched.
So what do you do if you are stuck in a situation where almost all your income is spent paying off several credit cards; but you still don’t see any dent in your total balance and you’re nowhere near your goal to eliminate your credit card debt?
Debt consolidation may be a good option to consider. You have to find a good consolidation program that best suits your particular situation, though. There are many options available to choose from. You can start searching for sources on the Internet.
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