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?
- Single Step Personal Finance Challenge- Credit Card Debt Elimination
- Credit Card Debt Elimination Using a Zero Percent Balance Transfer
- What You Should Know about the New Credit Card Rules and Regulations
- Discover® More Card 0% Balance Transfer for 18 Months Offer (formerly 24 month offer)