10/08/2008

Paying Off Credit Card Debt


In my book, Your Easiest Million, I mentioned a simple, but effective, way to eliminate credit card debt. It is a method which bucks conventional wisdom while addressing the mental aspect of this form of debt. The burden of credit card balances overwhelm people. For many, it is a situation where they see no way out. Each month is another mountain of bills coming in.

Here is a simple 2 step solution for getting this monster under control.

1. Pay all the minimums on each card except the one with the lowest balance. For this particular card, you will pay the minimum plus whatever extra that you can. Continue this until that balance is eliminated.

2. Take the money that was applied to the first card and couple it with the minimum that was paid on the next card with the lowest balance. This will increase the monthly contribution considerably. Continue on this course until that balance is eliminated.


Apply this technique until all balances are paid off. The conventional belief is to focus upon the cards with the highest rates first. While this makes some financial sense, it fails to consider the mental state that goes with debt. This method allows the debtor to feel that some progress is being made. As one who was in the credit card abyss at one point in my life, I know the elation that comes with paying something off. It is a wonderful sense of accomplish while giving one the feeling that there is a way out. Utilize this method to get yourself on the path to financial freedom.
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1 comment:

jimmo said...

This is a really good idea. I never heard it before but it does make sense.

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