Tag: credit card debt pay off strategies

Consolidate Credit Card Debt – Payments Getting Out of Hand?

Are You Ready To Consolidate Credit Card Debt?

If you are struggling to make your credit card payments every month and wondering when and how you will ever pay down your credit cards, it may be time to consolidate credit card debt using a personal loan.

First, ask yourself these questions:

  1. Are you paying high interest on your credit card debt?
  2. Do you have a large credit card balance?
  3. Are carrying balances on multiple credit cards?
  4. Are you looking for alternatives to expensive cash advances from your credit card?
  5. Do you have medical expenses or large purchases that you would rather not put on a high interest credit card?

If you answered “Yes” to any of these questions, a personal loan might be a good option.

How Personal Loans Can Help Lower Your Debt

If you have been carrying credit card debt, or you need to finance medical expenses or other large purchases and don’t want to use high interest credit cards, a personal loan may be a good option. Personal loans often offer lower interest rates and better payment terms than credit cards do.

Today there are many types of personal loan lenders in the marketplace. Some cater to high credit borrowers. Others are low credit friendly. In addition, if you consolidate credit card debt with a personal loan, you may be able to obtain a personal loan with a lower monthly payment that can free up some cash for emergency savings, or a small investment fund to hedge your debts.

Related:? Forget Retirement – Here’s Why You Need to Start Investing Now

When To Consider A Personal Loan

If any of the scenarios below apply to your situation, consider looking into a personal loan.

  1. If the interest you’re paying in credit card debt is greater?than the interest you can get on a personal loan. (Remember to look at all the associated expenses on the credit card and the loan -? both interest and fees.)
  2. If you’re looking to consolidate multiple credit cards into one simple, lower monthly payment.
  3. If you’re looking to finance a large purchase or medical procedure at a lower interest rate.

Before Taking A Personal Loan, Do These Things

  1. Call your credit card company and ask for better terms. Sometimes you can negotiate a lower interest rate, smaller monthly payment, or fee waivers.
  2. Look into transferring high interest credit card balances to a 0% APR credit card. Many credit cards offer an introductory APR of 0%, up to the first 12-24 months. If you think you can pay down your credit card during the introductory period, this may be a good option for you.
  3. If you decide to take on a personal loan,?research the lenders. Make sure there are no pre-payment penalties, fees, and no introductory rates that then go up,
  4. Compare offers from different lenders. Don’t go with the first offer you see. It’s now easy to compare across many lenders at once.

Check out our guide on how to get the best personal loan. We thoroughly review?the?best of the not-so-bad players?in the personal loan space.

After you Consolidate Credit Card Debt

  1. Don’t use your cards!?There is no sense in consolidating credit card debt only to run up your credit cards again. Put them in a? safe place but don’t cancel them. Keeping your accounts open and paid off will increase your credit score.
  2. Go on a spending diet. Cut back on all the little things that add up at the end of the month. Turn it into a game. See how much you can save. Use our?free app to help you stay on top of your game.
  3. Set up a budget. Figure out where your money is going. Designate different buckets for each spending category. When that category is depleted (e.g. movies), don’t spend beyond it.

Related:? DIY Credit Card Debt:? A Guide To Permanent Debt Relief

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Why Paying off Debt Feels Good (Even When Life Happens)

Anyone who gets serious about paying off debt knows that starting a debt pay down journey is the most difficult part. It?s brutal to face the music and really assess how buried you are. But once you?ve done that, and have put your debt pay down strategy in play, it?s incredibly liberating. The starting gun has gone off. The race has begun. And you?re out there in front. But it?s a long race, one that can involve many sacrifices and setbacks. It can get tiring. It can get old. It can get downright depressing. We need to learn how to stay motivated and remember that paying off debt feels good – even when life happens.

In the beginning…

When I could no longer avoid the glaring danger of being?over 50, broke, and in debt,?I knew I had to change my relationship with money because, apparently, we weren’t getting along very well. I mean, as soon as I had any, I?d get rid of it. (Pretty cold blooded, eh? If money were a friend, I?d been a pretty shitty friend.)

The fear of seriously looking at my consumer debt and lack of savings kept me paralyzed for far too long. I had to take action. (If not now, when?) I had to either change my lifestyle, or make more money. So I decided to have a go at both.

With newfound determination, I picked up a side gig, isolated expenses that I thought I could eliminate without dying, and most importantly, I used free resources to create a debt pay down strategy that would have me debt free in just a handful of years.

I was excited! No more money shame! It seemed that I was finally turning a corner.

Everything was on track. I could start to see a dent in my balances. It felt good to know I even managed to put some money aside for emergencies. I was excited! No more money shame! It seemed that I was finally turning a corner. And I was. But there was a really long trail around that bend.

Related:? Money Regrets are a Waste of Life:? 3 Steps to Get Out

Fast forward

For a good while I steadied my rhythm, kept my head down, and stuck with my plan. I got good at turning down expensive dinner invites and weekend trips with friends. But I?ll tell ya, it can get old resigning your life to a day-in-day-out grind of work and budget dinners. Before long, if you’re not careful, a nasty mindset-malware can begin to infiltrate your determination. Enter: ?Self-pity.

Feeling sorry for yourself can throw a wrench in your spokes and toss your motivation out the window.

If you dwell in it long enough, it can turn you against yourself because it leads to self-deprecation. You may find yourself blaming and shaming yourself for the past financial mistakes which led you to your current spartan life. And if you?re not careful, you may even feel like blowing off the commitment you made to yourself, splurge on destructive impulse spending, and literally hate yourself for it afterwards. Don’t do this. Just don’t. Trust me, it’s not worth it.?Feeling sorry for yourself can throw a wrench in your spokes and toss your motivation out the window.

The fix for self-pity is self-empathy

If your head starts to spiral into dark places, stop. Don?t make the mistake of thinking that you are all alone on this journey. Remind yourself that consumer debt is a serious national problem. You are not alone in this struggle. In fact, you are in the majority. What may set you apart, however, is that you are actually doing something about it.

So, be kind to yourself. Start a small empathy fund. Give yourself a treat now and then. Just because you can?t do all the things that you want, doesn?t mean you have to hole up in your room and eat Cup Noodles for the rest of your life.

Be kind to yourself. Start a small empathy fund.

Here?s what I did: ?I put a jar in a kitchen cabinet, and every night when I got home from work, I dumped all of the quarters out of my wallet into that jar. On a good day, especially if I’d resisted some urge to splurge, I might even throw in 5 bucks. That money was for me. It was my reward, and I could do whatever I wanted it with it without any guilt whatsoever. And when the jar was filled, I had fun planning how I was gonna spend it.

After awhile, that jar became a symbol of me saving. Yes, saving. I know that having to throw your hard earned money at debt every month doesn?t feel like saving, but don?t get it twisted. Aggressively paying down consumer debt rather than merely making minimum payments will save you thousands of dollars. It is the best investment you can make. You can?t get a return like that in the stock market. And your investment for this return? ?Empathy, perseverance, and patience.

Aggressively paying down consumer debt rather than making minimum payments will save you thousands of dollars. You can?t get an ROI like that in the stock market.

Related:? Why We Can’t Save

What to do when life happens…

You?re gonna hit bumps in the road. It?s inevitable. Sometimes life just doesn?t cooperate, whether we’re doing the right things or not. When I set up my debt pay down strategy, I never expected that I’d have to part ways with my company. That?s right – no full-time job. At first, I thought I?d just find another job in my industry and continue on with my plan. But after a series of disappointing realizations, I discovered that it wasn?t so easy to find employment at my age. (Yes, ageism is a thing.)

Without a full time job, ?lifestyle change? took on a much more profound meaning than merely buying the cheaper coffee beans, or passing up dinners out with colleagues.

To be honest, I was getting scared. My focus was no longer on solely getting a handle on my financial future, now I had to figure out how to survive, like, NOW. The stakes had been raised, and it was terrifying. The initial relief I felt from facing my debt, the excitement I discovered in embracing frugality, the self-confidence I had gained by taking control of my finances ? gone. For without a full-time job, ?lifestyle change? began to take on a much more profound meaning than merely buying the cheaper coffee beans, or passing up dinners out with colleagues. It was then that dangerous mindset-malware #2 reared its ugly head:? Defeat.

…and shit gets real

Even though I was finally taking control, was less in debt, had lowered my expenses, and was recovering from a life of blind consumerism, I felt like a loser. Even though I was eating healthier, living more creatively, more at peace with myself, and free of that underlying stress we all have when we are lying to ourselves, I felt like a failure. And I started to ask, ?What?s the use??

But when I took a step back and looked at the big picture, I realized that if I hadn?t started this journey, if I hadn?t gotten a side gig, saved some emergency funds, and refinanced my debt at a lower interest rate, I would have been in a much worse position. I’d already come so far in a year. Was I just gonna to give up now? Was I just gonna walk away from my dream of being debt free? Was I really going to the let the big banks win and rob me of my wages in interest for the rest of my life? Hell, no!

Related:? 5 Ways to Free Up Cash Without a Side Gig

The antidote to setbacks is perseverance

And this is when perseverance kicked in. I decided I’d come too far to just give up. I had to take it to the next level.

  • I started applying for jobs outside of my industry. (I even considered positions I would have been overqualified for 20 years ago!)
  • I sold everything I could live without on Craigslist.
  • I moved from the high-rent city to the low-rent countryside.
  • I took public transport everywhere it went. (And picked up a used bicycle to access places it didn’t.)

There will be setbacks. It?s inevitable. And while you may feel that you’ve already made all of the lifestyle changes you could, and have adopted the most frugal mindset possible at the time, sometimes you just need to dig deeper. You may surprise yourself when you learn what you can get used to living without. To ward off any uninvited feelings of panic, I stopped focusing on what it was I thought I was losing, and started focusing on what I still had: ?a roof over my head, food, and at least a small amount of steady income from my side gig. My health, the sky, the trees, and most of all, my sense of humor. (Definitely hang onto that last one!)

To ward off my feelings of panic, I stopped focusing on what it was I thought I was losing, and started focusing on what I still had.

I continually reminded myself that, although it felt like I was losing, this was just an illusion. For in reality, I was actually in better shape financially than I?d been before I started my aggressive attack on my consumer debt. Today I owed less money than before. This fact alone made me actually closer to being financially stable, with or without my full time job. (And if you really need to be reminded of how lucky we actually are, think about this for a few minutes: ?30% of the people on our planet don?t have access to a toilet.)

Related:? 7 Ways to Make Your Home a Sustainable Source of Income

When it seems like it will take forever?

Remind yourself that it won?t take forever. Don?t believe me? Play this little game with yourself. What were you doing five years ago? Do you remember what you were feeling every single day? No, of course not. The human brain is amazing. We tend to forget the details of our previous, tedious struggles. But we do remember moments of solace and peace; when we are truly present with ourselves. Remember this when the 3rd evil demon we’ll have to mitigate enters the room:? Impatience.

Impatience attacks us when we refuse to stay in the present.

Impatience attacks us when we refuse to stay in the present. Whenever you start future tripping and panicking, or ruminating on mistakes in the past, try to realize that neither of those places actually exist. You don?t have to freak out about the future, nor feel regret about the past, if you stay right where you are, right now. What are you doing right now? You’re on the internet, reading a blog post. Look up from your screen and look around you. What do you see? This moment, right now, is all you will ever really have.

…stop future tripping

You are on the right path, doing everything you can to make your future brighter, so let it go. Breathe. You can?t do anything about time, so practice learning to ignore it when it bothers you. Try to change the way you feel about the length of time it will take you to become debt free. Think of it instead as an opportunity to practice being that better version of yourself who will know how to manage your money when it’s finally freed up from paying down your debt.

Related:? 4 Ways to Make Good Money with Good Companies

Focus on the good stuff:? Paying down debt feels good

If there’s anything I’ve learned thus far, it’s that I’ve become a different person than when I started this journey one year ago. I’ve learned to forgive myself. I’m stronger and more resilient. I’ve learned that I can’t do jack about when tomorrow comes, but I can do something today to ensure it’s easier. I’m still learning, and totally expect there to be more lessons along the way.

Re-learn to enjoy that which money can?t buy and debt can’t take away.

It?s going to be a long, long road for me, and there isn?t a thing I can do about that, except to keep walking. But I refuse to be miserable while I?m doing it. When I feel sorry for myself, left out, or lonely, I practice empathy. When I feel like I can’t go on any longer, when it seems like I am defeated, I remember the courage it took to begin this journey, and I dig in for perseverance. And when I become impatient, when it feels like this will never end, I draw my attention back to today, back to now. Time will take care of itself. In the meantime, re-learn to enjoy that which money can?t buy and debt can’t take away, that thing you knew as a child before you were ever aware that an inane concept like “consumer debt” even existed:? life itself.

Related:? DIY Credit Card Debt:? A Guide to Permanent Debt Relief

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Credit Card Payoff Strategies: What the Card Companies Don’t Want You To Know

Credit Card Payoff Strategies: What the Card Companies Don?t Want You To Know

“I don’t get it. I make sure to pay the minimum on time every month, just like the credit card company said to do. Why is my debt going up?”

This is a real question we received from a career professional. It’s not her fault. The fact is, credit card companies don’t want you to pay off your debt. Your interest payments keep them in business. What’s more, to make sure you keep paying that high interest, credit card companies print subtle marketing messages such as, “make sure to send in your minimum payment on time every month!” It almost sounds like they’re trying to help you, right? They are not.

Are you stuck in minimum payment hell?

Faithfully paying your minimum payments every month but not seeing a dent in your balances is soul-crushing for sure. But let’s be real – if a minimum payment is all you are throwing at each balance, you are just dog paddling while the current gets stronger.

Even if you can only come up with a small amount of extra cash each month, it?s enough to start to DIY your debt. And starting is the most important step. Once you choose a strategy, put it into play and set it on automatic. This will build momentum and you will be on your way.

Let?s assume you’re able to scrounge up an extra $100 a month to attack credit card debt. Here are two different credit card debt payoff strategies. Before deciding which method you want, you’ll need to download a statement from each of your accounts. (It will probably take you all of 20 minutes.)?

Information needed before you start:
  1. Credit card balances on each account.
  2. The interest rate charged on each account.

Option 1: Pay the lowest Balance First (Snowball Method)

Here’s how it works. Throw that extra $100 at the account with the lowest balance in addition to your monthly payment. This means that if your monthly minimum payment is $150, increase your payment to $250 until the lowest balance is gone. Then comes the next step. Once the first card is paid off, you then take that $250 and attack the next card, adding it to the minimum payment.

See how that works? That snowball payment against your debt gets bigger and bigger, without you having to put in extra cash beyond the $100.

snowball effect graphic


  • It will take less time to pay off the first card because you are targeting the lowest balance.
  • Once you?ve paid off the first card, your pay off power increases, so?the speed with which you pay off the next card also increases. You start small and build momentum over time.?
  • It?s motivating. Paying off one of your accounts feels good and gives you the self-confidence to keep going. Being able to throw larger and larger payments at your balances helps you see your impact.
  • Paying off an account can have beneficial effects on your FICO credit score.
  • Your lowest balance may not be the debt that has the highest interest rate. The higher the interest rate, the faster your debt increases. It is more expensive to carry debt on a higher interest rate card.
    • You may end up paying more interest in the long run.
    • It may take you longer to pay off your total debt balance.

Option 2: Pay the Highest Interest Rate Card First (Avalanche Method)

With the Avalanche Method, you throw that extra $100 at your highest interest rate?in addition to your monthly payment. This means you increase the minimum payment of your highest interest rate card by $100. As the balance lowers on this card, less money is charged in interest. Your debt will cease to increase as rapidly while you are actively lowering the balance.

avalanche vector graphic

  • You will save more money in the long run.
  • You will pay your total debt balance off sooner.?
  • If your highest interest rate card is also your highest balance card, it may take you longer to pay off, and you could lose motivation. Math is your friend here. If you need motivation, do the math.

How to Save Slowly: A Beginner’s Guide

Which method is best for me?

Look at your balances and your interest rates and ask yourself some deep questions. Are you the type of person who is likely to give up without seeing results? Perhaps the Snowball method is best. On the other hand, if math and logic are enough to keep you motivated, attacking the biggest and baddest debt first using the Avalanche method may be more your style.

This sounds complicated but it isn?t.?You only have to make one decision. Which card do I throw that extra $100 bucks at?

Related content:? How To Free Up Cash Without a Side Gig

Must Do Tips

1. Set and Forget

  • Make sure you’ve budgeted an extra $100 for your payment.
  • Increase the minimum payment of the card you are going to attack first by $100 and set it on automatic payment. This is crucial. We are creatures of habit. If you set it on automatic, you will create a good new habit for your money journey.

2. Don’t Use Your Cards

  • Put your cards on freeze. Seriously, drop them in a tupperware box filled with water and put them in your freezer if you have to. (But don’t close your credit card accounts as this could impact your credit score.)
  • Remove any saved credit card information on shopping sites like Amazon.
  • Cancel any recurring monthly fees that are not absolutely critical. If they are critical, move them to a debit card.

Related: How Credit Utilization & Reporting Dates Impact Your Credit Score

Parting Thoughts

You may be thinking that a measly $100 extra a month isn’t going to do much to your overall debt. But if you’d started this a year ago, you would have thrown $1,200 at your balances by now.?Wouldn’t you feel better knowing that you are addressing the problem than allowing it to continue growing? Try to find, or learn to live without, an extra $100 a month, and next year you will be in a better position. Start, keep going and don’t give up.?

Related: Is It Time to Consolidate Your Credit Card Debt?

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