Did you guys realize that today is National Credit Card Reduction Day?
Who even knew this was a thing? I know I didn’t. But I love the idea. As you guys know, I’m passionate about helping people work their way out of debt and build a plan for their money.
This is a proven plan that works and has the power to change your life!
The average family with credit card debt has nearly $17,000 in balances, according to NerdWallet’s 2016 American Household Credit Card Debt Study. That’s crazy! The good news is that way of life doesn’t have to be normal!
So how do you make a plan to get rid of that credit card debt? First off, I want you to do just that—eliminate the debt! The thought of reducing your debt is awesome, but let’s go ahead and go all the way, right?
Here’s how to do it.
The first thing you need to do is build a small $1,000 emergency fund. This fund is designed to catch all of life’s emergencies—like repairing a flat tire, an unexpected doctor’s visit, and things like that.
Having that fund set up (in just a traditional savings account) allows you to stay focused on paying off debt when emergencies pop up—and they will.
After you have your emergency fund, I want you to start working on the debt snowball. This is where your credit card debt will come into the picture.
If you have multiple debts, the debt snowball is an awesome way to knock them out one at a time. List out your debts, one by one, from smallest to largest. This list should include your student loans, credit cards, car payments and so on. Don’t worry about interest rates when it comes to the order you pay off the debts.
Now, put as much money as you can toward the smallest debt while paying the minimum on the others. Once the smallest one is paid off, take all of the money you put toward it each month and add that to the minimum payment on the next smallest debt. Keep at this until you work your way through all of your debts.
The debt snowball allows you to get a couple of quick wins and gain momentum as you begin to pay off debt. Paying off the smallest debts first might not seem that important, but those early wins help you stay positive and motivated to knock out all your debt.
Remember, build a small emergency fund first. Then, go crazy paying off debt—including those credit cards—with the debt snowball. This is a proven plan that works and has the power to change your life!
Where are you in your debt-free journey? Let me know in the comments!