The new year is a time for a fresh start. I have a suggestion for new year's resolution: pay off your credit cards.
The economy isn't looking to good in 2009. People have lost their jobs and more will lose their jobs this year as the economy continues to free fall. So what can you do? Starting paying off debt now.
You need to dig out of credit card debt while you still have a job. It's not going to get any easier as the economy gets worse.
How to Pay Off Your Credit Card Debt
- Figure out how much extra you can pay each month.
- Gather up all your credit card statements.
- Start paying extra on the card with smallest balance first.
- Once the credit card with the smallest balance is paid, repeat step 3.
- Celebrate, your credit cards are paid off!
Why is This System the Best?
Find room in your budget for extra credit card payments. This may mean you have to disconnect the cable TV or get rid of the cell phones, but that short term sacrifice will pay off in the long run.
First, you have to come to terms with all your debt. Get it all out in the open and figure out how big a hole you've got. It's amazing how many people don't know what they really owe.
The real secret is paying off the smallest debt first. Dave Ramsey calls this the "debt snowball." Dave know that most personal finance problems are really psychological not economic.
By paying off the smallest balance first, you will build up momentum, like a snowball rolling down hill, making it easier to pay off each successive debt.
At the end of 2009, would it be great to look back at the year and celebrate the fact that you've finally managed to pay off those credit cards? I'll never forget how good it felt to pay off all my college credit cards. It was awesome.
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Comments
1 Comment so far
Great suggestion and I'm going to take you up on that one! I've got 3 credit cards, thankfully with low balances to begin with. They are as follows:
$300 credit limit on one exceeded, easily paid off in the next two weeks.
$500 credit limit on another exceeded or durn near close to the limit, easily paid off within in 1 month.
$1250 credit limit on yet another that is exceeded and can/will be paid off by April 2009!
Once those are paid off then that's it for the credit cards. We'll be debt free except for our furniture loan which is only owed another 16 weeks on. After that…..nothing! Zero, zip, zilch, nada.
Man it'll be nice going into spring and not having any debt.