I accumulated credit card debt when I had just graduated from college and hadn’t found my first job. Now that I am more financially stable I am looking to pay it off in the best way possible. I don’t have a lot of disposable income so paying off in lump sums or greatly increasing the monthly payments on all the cards isn’t an option. What approaches have helped you? Any good resources or tools?
Albe, you can try paying off the card with the lowest balance, and then pay off the next lowest, and so forth. I'll try to explain. For example:
Major Credit Card Balance: $1000, Monthly Payment : $50
Shopping Card Balance : $500, Monthly Payment : $25
Other Credit Card Balance : $200, Monthly Payment : $10
So here you would have $85 of credit card debt you are paying off each month. With the interest tacked on, your monthly payments are not going toward the principal amount if you are only paying the minimum- which will result in you paying more than you owe AND it will take longer to pay off. Since you are unable to make lump sum payments at the present moment, you would need to commit to setting aside extra money to go towards your lowest credit card. This will require sacrifice. I would say, set aside $25 at min. Or try to do $50 ( $25 per check or something). The more, the better.
So in this example, we are going to go with saving $50. So instead of paying $10 toward the $200 balance, pay $60 - and continue to pay the min balance on the others (ON TIME lol). At this rate you should have the $200 card paid off in 3-4 months, if you can't sooner. After that card is paid off, you take that $60 a month you were paying and tack it on to the min payment of the next card - which in this example is the shopping credit card. So instead of paying $25/month, you would pay $85 (as you are no longer needing to pay anything on the previous card). The $500 should be paid off in 5-6 months . Then take that $85 and add that to the $50 payment for that last card and the balance should be paid off within 8 months!
(Some prefer to pay off the cards with the highest interest rates first. That would also work)
You just have to sacrifice a LITTLE bit. Maybe skip eating out a few times a month or buy generic for a little while. Figure out where you can save and keep that commitment to yourself. I was swimming in debt :-( and when it came time to buy a home i was at a stand still. So I had to do something about it. I was able to make some lump sum payments, but when I didn't have that bonus money, I used this method and it worked well for me.