Beth sends us an email to our tipline asking:
“I am 27 years old, single, and I have too much credit card debt.
What is the fastest was to pay down credit card debt?“
There are questions where if you were to ask 10 people the same question you will get 10 different answers, if not more. And this is one of them: the fastest, best, optimal, way to pay down credit cards debt, or debt in general.
From a strategic perspective, there are three principles:
- Stop accumulating more debt.
- Slow down the compounding of interest.
- Pay down as much as you can, every month.
From a tactical perspective, what brought you to the point where you have to ask this question, will not take you out of debt, up to today you’ve spent more than you were earning, so a change in habits is overdue. What got you here, won’t get you there. And it has to be something that you feel that it is you, that you can “own” and be proud of it.
Most people will tell you to curtail your spending by going on a budget, buying generic brands instead of premium, cutting coupons, walk or take public transportation instead of driving, and these are all good ideas. But if you are like most people, you look forward to a budget as much as you look forward to a root canal.
So, if you have tried the usual budgeting, cutting back, and coupon clipping and it didn’t work, we are proposing a new creative idea: we’ll call it, take the plunge to get rid of debt right now. This is the one-year plan, so while it might seem a bit radical, it’s truly like a root canal: it doesn’t last long, and the benefits last a lifetime:
- Change job: go out there and find yourself a job that pays more and has a shorter commute. No matter what you hear about the job market there are always companies out there looking to fill a position. It’s very easy to find a job that pays at least 10% more than you current job, and once you get it, put that extra 10% from your paycheck into your monthly credit cards payment.
- Get a part-time job: The holiday season is coming, and stores are ramping up by hiring seasonal help. There are also telecommuting jobs that you can do, they might be using the same skills that you use at your full time job, or you can expand your horizon and follow your dream by getting your feet wet into a market or industry that you’ve always dreamed about working in. Put the extra money to work by increasing your payments to your credit cards.
- Now that you are looking for a new job and you have a part-time job, you will ave less time to shop. Give yourself a moratorium on shopping: no new clothes, no new stuff for your apartment for one year. Go dig into your closet for retro-look clothing, mix the shabby-chic look with funky, before you know you’ll be a trendsetter.
- No eating out, and pack your lunches. Do your grocery once a week, and make sure you are covered for your lunches at work, and your dinners at home. You don’t have much time anyway since you have two jobs.
- Sell your unused stuff: look in your closets, basements, storage area. For sure you have old clothes, electronics, furniture and other objects that you no longer use, or that you have no used in a couple of years. List them on Craigslist or eBay and sell them off, take the money and sent it to your credit cards company. Not only it will help lower your debt, but you’ll make someone happy by letting them buys something that they want and need at a good price. And you will de-clutter your life as well. Everybody wins.
- Social life: you do need a social life, but a friend in need is a friend indeed. Tell your friends that you are taking the one-year plunge to rid yourself of your credit cards debt, so while you will still be able to go to the movies, and for one drink here and there, you won’t be able to try the newest and greatest restaurants in town, or those awesome concerts coming to town. In exchange, offer your place as a venue for dinner and a movie (potluck), game board night, cranium night, book club, the possibilities are endless. Money doesn’t buy friendship. And if you know any of your friends who could use a break from their own credit cards debt, ask then to pledge with you the one year plunge.
- Holiday presents: tell your family and friends that this Holiday season you are giving yourself the best present ever: you are getting yourself out of debt, so you will not be able to buy them presents and they should not buy you a present either. If feasible bake them something like home made cookies just as a token of appreciation, and instead of a ready-made card, get pen and paper and write each one of them an old fashion letter telling them how much you love them, and how much they mean to you, and thank them for their support: past, present and future. And mean it.
Keep at it, keep a journal, and keep a monthly total of your total credit cards debt, how much you’ve paid down and how long it will take to bring the total balance to ZERO! And every month celebrate by treating yourself to something nice yet inexpensive, like a movie, or a small dinner with friends or a friend. Some people have even gone as far as to keeping a very public blog, documenting their progress, getting support, and also collecting donations and advertising their wares for sale.
Think abut this time last year, time flew by, and your credit cards debt is still unmanageable or worse.
Then think about a year from now, how will you feel once you see that all of your credit cards statements say:
Balance = $0.00 PAID IN FULL
How good will that feel, and it was because this article that started it all, that made you take the plunge, and now you have a brand-new job, closer to home, a shorter commute, experience in a new industry where you’ve always dreamed of working, and you are debt free: life doesn’t get any better, does it?
For additional tips on how to lower the rates on your credit cards and how to make the most of your monthly payment see the article: How Many Credit Cards? And How to Reduce Credit Card Debt?
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