So now that we have our budget as well as began to cut our cost we can start to tackle the debts. needless to say there is no specific way that will work for every situation, so it’s really up to you ( going back to the being honest with yourself part) to see what really works for you. This part is part physical discipline, part mental strength, and just patience. its physical discipline because you have to know not to impulsively pull out that credit card for any little thing and more, mental strength because you have to know where your money is going to go to work best for you, and overall patience because you have to realize that no matter how much debt you have either 1 thousand dollars or even twenty thousand dollars its going to be sometime before you pay all of it off, not years but definitely not overnight.
So the two major and most popular methods to tackle debt are the snowball method and the high interest first method. Snowball is pretty easy to figure out, pay the card with the smallest balance first then use that money towards the next and so on. High interest is just as simple but depending on your credit cards it can get confusing, because you will have to pick out the card with the highest interest and knock that one out first then follow the routine until all done.
So many people swear by the snowball method because its sort of rush when you realize that you have paid of one credit card you can then move on to paying the next one. Illl admit I have used this method and that is actually what i am currently attempting, my main issue with this is that the accounts with a higher balance and high interest continue to build interest which makes it that much harder to deal with.
Then on the flip side we have taking on the higher interest cards/ balances first. This one is the same concept as the snowball method in that once you finish one or at least reduce the amount you’ll have more to move to the next one. However just as with the other one this method gives me the same issue, I’m focusing on one thing but I still have the smaller balances to worry about.
So this is where I try to implement a combination of both. I have been making the minimum payments on the cards but I try to make enough available where each card will get a bigger payment than the minimum. this way I can A) decrease the lower ones while also B) paying of interest. Also a note with the interest payments is that I recommend looking at all your balances and seeing how much your interest payment is, from there make the minimum payment and try go pay an equal amount of what the interest payment will be. Example credit card x has a minimum payment of 50 dollars, however the interest is 25 dollars, so with a balance of 1000 dollars every time I make a payment of 50 dollars half of it is basically going to interest. So what I recommend is making a payment of 75 dollars, that way you’ll actually make a 50 dollar payment to reduce principle faster and next time your interest will be lower. Also please don’t mention the fact that the above numbers are completely unrealistic, I just couldn’t think of anything else. So as you begin to pay of the credit cards you will notice things begin to clear up and before you know it your credit will skyrocket your life will get easier and we are on our way to traveling all over. However this all takes patience, that is why I have one last post about debt help coming up, probably posted in the next 2 days.
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