Credit card debt is something that seems to stick around with us. Whenever we try to get ahead, life happens and we charge it. Before you know it, you’re stuck with a $10,000 credit card bill that you can’t seem to get rid of.
Why is it so difficult to get out from under credit card debt? Even if you have made aBUDGET, it still seems nearly impossible to get rid of that debt. The reason for this phenomenon is due to the high-interest rate that you are paying on a monthly basis. Below you will see a simple graph that shows a common repayment strategy. (Don’t forget your free budget printables here!)
$10,000 Credit Card Debt Scenario
If you have a $10,000 credit card with an 18% interest rate you are going nowhere fast. In the above scenario, even if you were to pay $400 a month on the bill and refuse to put any more debt on the card, it would take you a little over 2 1/2 yearsto pay off your credit card debt.
Even on a budget, it can be difficult to pay $400 to the debt each month. However, at this rate, it would still take you a considerable amount of time to pay off. This is where people quickly lose motivation and give in to the debt monster.
Before you throw in the towel and give up, let’s see what we can do to make this work a little more in our favor. What if we could commit to adding $100 more, for a total of $500 a month to our payment? This is how it would affect us:
By adding one hundred dollars a month, we have shaved off over 6 months from our debt repayment. This is how we start to take control.
Increase Your Monthly Payment – Easily
So obviously small increases affect our debt payoff substantially. The idea is to contribute as much as you possibly can to your debt as quickly as you can. Supposing you already have aBUDGET, let’s go over it once more and see what we can cut out. While you are doing this, imagine the peace you would have if you didn’t have this monthly debt payment hanging over your head. You can get to this place sooner than later if you decideenough is enough!
If you have a vehicle payment, what can you do to get rid of it? Perhaps selling that car and buying a cheaper car is an option. If you and your spouse have 2 cars, could you get rid of one and carpool? It’s time to think outside the box. There are several solutions to increase your income, but you need to identify what areas you can cut out of your life.
When you’re done cutting, it may be time to look into a side hustle. You could easily make a couple hundred dollars a week working part-time as a Lyftdriver or walking dogs. Think outside the box! This is your future and your stress we are talking about here!
$1,000 Monthly Debt Repayment
If you were able to pull off putting $1,000 a month towards your debt imagine what you could accomplish! I know $1,000 may sound unreasonable or unrealistic but I promise you it’s not. If you cut back enough and get a side hustle, you can easily reach that goal. It’s about being focused and getting to a point where you’re tired of being broke! If you were able to throw $1,000 a month to your credit card debt, this is how it would affect your debt:
As you can see, it would be just over a year to pay off your debt. Anyone can work a side hustle for a year – I have been doing mine for 13! It’s about focusing on what you want and what you’re willing to do to get there.
Should You Move Your Debt To 0% Interest?
If you receive credit card offers in the mail, you may be tempted to move your debt over to one of the cards that offer 0% interest for the first year. Before you immediately jump on the offer, you need to read the fine print. What percentage does the interest jump to after the first year? If after the 12 months it jumps to 22% or 23%, it doesn’t make sense to change gears. The companies that offer the 0% are betting that you don’t read the fine print, and you don’t pay everything off in a year.
Other things to consider are balance transfer fees. These can differ but a standard fee is 3%. So after transferring your balance, you would be adding on another $300 to your debt.
The only time it may make sense is if your new card will be offering a substantially lower interest rate. If this is the case, it may be worth the transfer fee – but make sure you do the math first.
For simplicity sake, I would not bother with card transfers. I would focus on paying your current credit card off asap and avoid putting anything else on credit.
The Best Way To Pay Off $10,000 In Credit Card Debt
⊕First and foremost – you need aBUDGET. – And your free budget printables!
⊗Cut as much as you can out of your budget and find extra money
⊕ Ensure you have an emergency savingsFIRST!
⊗ Increase your income through a side HUSTLE.
⊕ Put everything you can towards that debt to pay it off ASAP! (Including Tax Refunds)
Use A Credit Card Payoff Calculator
I recently created a new calculator that will tell you how long it will take you to pay off your credit card debt! Check out my credit card payoff calculator to find out how much work you have to do.
That’s it – pretty simple, right? Easier said than done I know. This debt problem isn’t so much a debt problem as it is a lifestyle problem. We have debt because we buy things we don’t need. Changing our thought processes and lifestyles will relieve our financial stress. The majority of the time, we just need a plan for our money. That is where the budget comes into play. Give yourself a path to follow and stick to it.
I am proud of you my friends. Your continued financial education will lead you to financial freedom. It’s amazing to see people changing all around me. Take control of your money and you can take control of your life! If you haven’t already, please subscribe to my blog via email below. Thanks for reading, and as always, you work too hard to be this broke!
-Ryan
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