Getting into credit card debt couldn’t be easier. In fact, many credit card companies could even be said to make it a little too easy. Even those with the best of intentions often find themselves owning more than they ever expected, which can become a huge hazard to not just your personal finances at the moment, but your financial future as well.
The first thing you should do when finding yourself in this situation is to assess your monthly budget to find out how much you can put aside to paying your debt down. If you don’t have a monthly budget, now is a great time to figure one out.
With your budget in hand, go ahead and add up all the money you make in a given month. Then do the same with your expenses. This includes the minimum amounts you own on all your cards and any loans you may currently have out.
Whatever you have left is the money you can send to your creditors every month to get rid of your debt. This only works, though, if you have the kind of budget that actually takes into account the amount you want to put toward savings, the minimum you have to spend on food and emergency funds in case something goes wrong. Otherwise, the above equation could leave you worse off.
Now that you know what you can spend, there are two ways to pay off your debt in the quickest time possible. Starting with the card that has the highest interest rate will end up saving you money in the long run.
On the other hand, go after the lowest balances first for an immediate sense of accomplishment and less cards to worry about sooner.
Either way, once you get into stable finances again, it’s important you come up with a plant to make sure you stay out of trouble in the future. This should probably include fewer credit cards.