Are you paying off credit card debt?  Do you have a lot?  If you’re not paying your credit cards off, you should be.  Do you have a plan to pay them off within three years?

It doesn’t matter if you owe $100 or $10,000.  You should set up a plan to pay that off within just a few years.  The interest rates, especially on credit card debt, will kill you.  Do you even know your interest rate?  If not, you should.

There are two ways to look at paying off your credit cards.  The first way is to take the card with the lowest balance and pay that off first.  Then add that payment you were making to that card.  Add it to the next lowest balanced card.  So, for example, let’s say you were paying $25 each month on the lowest balanced card and $50 to the next lowest balanced card.  After you pay off the $25/mo. card, you will add that $25 to the $50/mo. card.  Your payment to card #2 will then be $75/mo.  If you pay that card off, then you can add $75/mo. to the third card.  Continue this payment method until you get all of your cards paid off.  You’ll be surprised how quickly you can pay down your debt this way.

The second method is to take the card with the highest interest rate and pay that off first.  Then, just as in the previous example, add your payment to the card with the second highest interest rate, and so on.  This method prioritizes reducing your interest rates as you pay your cards off. 

The bottom line is that once each card is paid off, you don’t ever run them up again.  And when your cards are all paid off, if you use them, pay them off monthly or even more frequently.  I pay them off online as soon as a charge goes through.  That way, I keep the card at a zero balance and under control.  I never charge more than I can pay off.  And, my card usage is budgeted for.

Moral of the story:

Make a commitment to pay off your credit card debt within 36 months.  Once paid off, keep them paid off.  I talk more in depth about this in my book, Broke!  Been There, Done That, NEVER Again!