Debt Reduction Techniques: Pay off Credit Cards Faster

Every single one of us Frugalites wants to pay off our credit card bills faster. Here is a simple technique that works to do just that!

Let's say you have three credit cards:

• Credit Card A - Balance $4200.00 (Interest rate 9%)
• Credit Card B - Balance $560.00 (Interest rate 18%)
• Credit Card C - Balance $1500.00 (Interest rate 4%)

While Credit Card A is the one that worries you the most, don't work to pay it off entirely first. I know you might be scratching your head right now -- but you need to use the SNOWBALL EFFECT for paying off debt. It works like this:

• Continue to pay the minimum amounts on all of your debts/credit cards. On the credit card with the smallest amount owing, pay as large a payment as you can afford each month, until the balance is at 0.
• Let's say that after 4 months of paying $140 on Credit Card B (the one with the highest interest rate AND the lowest amount owing) you've eliminated that credit card payment. Congratulations! Now...use that extra $140.00 a month on your next lowest amount owing - which is Credit Card C. (Some people choose to pay off the highest interest accounts first. This is entirely up to you. I prefer to stick with the easy way of getting rid of the smallest amounts first.)
• So, now you're paying an additional $140 per month on Credit Card C - that is, on top of the minimum monthly payment you were already paying. Continue like this until this credit card payment is also eliminated.

See how this works? :) After a while, you'll not only have a great sense of accomplishment - by ELMINATING some of your debt - but you'll also be working towards your eventual goal of ELIMINATING ALL OF YOUR DEBT!

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