How to Calculate Credit Card Accelerated Debt Payoff
Create a realistic budget., Stop using your credit cards., Make a list of your credit card debt., Organize the credit card list with the lowest balance first and highest balance last., Pay the minimum payment on each credit card except the card...
Step-by-Step Guide
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Step 1: Create a realistic budget.
The best method for developing a realistic budget is to review your bank statements over the last three months, listing all expenses and income, then dividing the totals by 3 to get an average monthly amount.
Review all expenses to find places where you can save money.
Choosing to pack your lunch each day, eliminating coffee purchases and using grocery coupons are all ways to cut expenses.
If you have already cut your expenses as much as possible, find ways to generate extra income, even if it requires finding a second job.
When developing your budget, only include the minimum payments required on your credit cards and not any extra you had been paying over the past three months. -
Step 2: Stop using your credit cards.
In order to be successful with the credit card accelerated debt payoff method, you cannot add any additional debt.
It is important to learn how to live within your budget without adding debt in order for the program to be successful. , The list should include the name of the card, the balance owed, the interest rate and the minimum monthly payment.
Example:
Credit Card A:
Balance $2500; monthly payment $50; Interest 6%, Credit Card B:
Balance $2000; monthly payment $30; Interest 2%, Credit Card C:
Balance $5000; monthly payment $100; Interest 8%. , Example:
Credit Card B:
Balance $2000; monthly payment $30; Interest 2%, Credit Card A:
Balance $2500; monthly payment $50; Interest 6%, Credit Card C:
Balance $5000; monthly payment $100; Interest 8%. , Example:
Credit Card A:
Payment $50, Credit Card C:
Payment $100. , Example:
Credit Card B:
Monthly Payment $30; Extra from budget $50; Payment $80 ($30+$50) Send $80 to Credit Card B. , Whenever possible, send additional money to Credit Card B to pay the balance off even faster. , Example:
Credit Card A:
Payment $50; Amount from Credit Card B $80; Total now sent to credit Card A $130 ($50+$80).
Continue with this method until all credit cards are paid in full. -
Step 3: Make a list of your credit card debt.
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Step 4: Organize the credit card list with the lowest balance first and highest balance last.
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Step 5: Pay the minimum payment on each credit card except the card listed first.
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Step 6: Pay the minimum payment plus the extra amount from your budget on the card listed first.
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Step 7: Continue paying with this method until Credit Card B is paid in full.
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Step 8: Begin paying the amount you were sending to the first credit card on the next credit card on your list plus the minimum payment.
Detailed Guide
The best method for developing a realistic budget is to review your bank statements over the last three months, listing all expenses and income, then dividing the totals by 3 to get an average monthly amount.
Review all expenses to find places where you can save money.
Choosing to pack your lunch each day, eliminating coffee purchases and using grocery coupons are all ways to cut expenses.
If you have already cut your expenses as much as possible, find ways to generate extra income, even if it requires finding a second job.
When developing your budget, only include the minimum payments required on your credit cards and not any extra you had been paying over the past three months.
In order to be successful with the credit card accelerated debt payoff method, you cannot add any additional debt.
It is important to learn how to live within your budget without adding debt in order for the program to be successful. , The list should include the name of the card, the balance owed, the interest rate and the minimum monthly payment.
Example:
Credit Card A:
Balance $2500; monthly payment $50; Interest 6%, Credit Card B:
Balance $2000; monthly payment $30; Interest 2%, Credit Card C:
Balance $5000; monthly payment $100; Interest 8%. , Example:
Credit Card B:
Balance $2000; monthly payment $30; Interest 2%, Credit Card A:
Balance $2500; monthly payment $50; Interest 6%, Credit Card C:
Balance $5000; monthly payment $100; Interest 8%. , Example:
Credit Card A:
Payment $50, Credit Card C:
Payment $100. , Example:
Credit Card B:
Monthly Payment $30; Extra from budget $50; Payment $80 ($30+$50) Send $80 to Credit Card B. , Whenever possible, send additional money to Credit Card B to pay the balance off even faster. , Example:
Credit Card A:
Payment $50; Amount from Credit Card B $80; Total now sent to credit Card A $130 ($50+$80).
Continue with this method until all credit cards are paid in full.
About the Author
Frances Miller
Enthusiastic about teaching practical skills techniques through clear, step-by-step guides.
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