Freedom.  It’s a wonderful feeling making the final credit card payment.  Unfortunately, the way credit card payments are set up it takes a long, long time to pay off debt – longer than you might think.  The credit card companies want their customers to pay interest as long as possible.  Payments are determined by a percentage of the balance; as the balance goes down, so does your payment.  While this might seem like a good thing for your monthly budget, it makes it hard to get your card paid off.  Credit card companies like it that way. 

Many credit cards require a minimum payment of 2% of the remaining balance.   If you have just one credit card with a balance of $2,000 at 18 % and you only pay the 2% minimum balance, it will take you about thirty years to pay off and you will pay over $5,000 in interest!   That should be enough to get you motivated to Squash your Credit Card Debt!     

Rule:  Always pay more than the minimum payment.  Any extra money you pay on your credit card bill will go directly toward your balance, instead of the interest.  

But I can barely afford the minimum payment.  How can I afford to pay more?

Let’s talk about some ways to get rid of the old ball and chain: your debt. 

1-    Use your Stimulus check.  Put as much as you can toward your debt.  Since interest is calculated on the balance, paying a chunk of your debt off quickly will lessen the amount of interest you pay. 

2-    Sell your stuff.  Go through your house and gather up anything you’re not using anymore and have a yard sale.  This can generate some quick cash for a good payment. 

3-    Shrink your entertainment budget.  Look for cheap or free dates and family outings.  Try free community concerts, picnics at the park, watching the sunset, or just taking a walk.  

4-    Cut down on treats.  Estimate how much money you spend on treats in a given week.   Get that money out in cash each week until your next credit card bill comes due.  Then put that money into the bank and put it toward your next payment. 

5-    Drive less.  Condense your driving into fewer trips where possible.  Sit down at the beginning of the week and plan what errands you will need to accomplish.  If possible, have one day where you take care of your errands.   Don’t go to the grocery store more than once a week.  This will save on gas, and on groceries. 

6-    Keep to the basics.  You probably need less than you think.  Think of the basics:  Food, clothing, shelter, medical, and necessary school or work expenses.  If you’re tempted to buy something that doesn’t fall into one of those categories, don’t do it.  Every thing you don’t buy equals more money to put toward your debt.  If it’s not absolutely necessary, wait.   

7-    Cook from scratch.  With the cost of groceries skyrocketing, it pays to cook from scratch.  Buy things you use often in bulk to save money. 

It’s worth the sacrifice to put extra money toward your credit card debt.  When that final bill comes due, and after you make the very last payment, take a deep breath.  Freedom.  

Related posts:

1. 7 Ways to Stay in Debt Forever
2. Top Ten Reasons to Pay off Your Credit Card Debt
3. Life or Debt: The Psychology of Consumer Debt
4. Credit Card Subsidies: Three Ways the Minority is Paying for the Majority
5. Put the Safety on Your Bad Debt: How to Avoid Shooting Yourself in the Foot with Credit Cards