No matter how much I dreamed about what it would be like to pay off my credit card debt, until I took action, nothing changed.  Hopefully what is written below will quickly teach you some techniques on how to pay off credit card debt.

Gathering The Facts – The First Steps  To Learn How To Pay Off Debt

Make a list of all of your monthly expenses and the amounts of your monthly bring home pay. Look at your bank statements to make sure you have listed All of your expenses.  Gather all of your latest credit card, loan and mortgage statements.  You will need to know the following about each of your debts:

1. Total amount owed on debt
2. Your monthly payment to each debt
3. Months you have left to pay
4. The interest rate you are being charged
5. Your monthly expenses excluding any credit card debt
6. Your monthly take home pay

Add up the amount you owe (number 1 above) for each of your debts and this will tell you the total amount of your debt.  Add up the monthly payments (number 2 above) for each of your debts and this will tell you the total amount of monthly credit based payments you make each month.  Add together your total monthly credit based payments (number 2 above) and the total amount of your other expenses (number 5 above) and this will tell you the total amount you pay out each month.

From this exercise hopefully you will discover that your bring home pay (number 6) is more than all of your expenses and that you do have money to pay off debt.  This puts you in a prime position to immediately jump on the strategies I will lay out for you.  If you discover that your expenses are more than your bring home pay you will need to create a family budget plan so that you can quickly change this situation.  But even if you don't find out that you have more expenses than money, you should still set up a family budget plan so that you can monitor your spending to pay off your debt.

Part II of the plan I used to pay off my credit card debt

The interest pay off – Targeting number 4 on the list above

Most credit card and mortgage companies charge you interest on the principal balance that is left each month.  If you make larger monthly payments then the amount you have to pay goes down every month.  However, the more you pay off the less interest you will have to pay each month.  If you take the credit card or loan with the highest interest rate and apply more money to this card monthly, this will save you the most money.  Once you pay off that credit card or loan then move to your next highest interest rate credit card or loan.  Mortgages are generally the lowest interest rate you will have so you can leave this one for last.

If you have a loan that charges a set amount of interest over the entire life of the loan, you are better off just paying the regularly monthly payments.  You will not get a decrease in the amount of interest so it is no benefit to pay extra money on this loan using the highest interest payoff strategy.

The minimum loan pay off – Targeting number 1 on the list above

Another way to pay off your debt fast is to pay off the smallest balances first.  Look at your balances owed, which you should know from number 2 above.  Start making extra payments on that smallest debt.  Once you pay that off, take the monthly amount that you were paying to this last paid off debt and add it to the monthly amount due for the next smallest debt.  For example, if you were paying $250 a month on your Visa card and now it is paid off.  The next smallest debt is a Mastercard that has a monthly payment of $50.  Take the $250 that you were paying to Visa and add the $50, which is the monthly payment due to the Mastercard, and make a monthly payment of $300 (250 + 50) to Mastercard.  You will keep doing this for every debt paid off until eventually; you will just have your mortgage left.  If you follow this same method for your mortgage, it will be paid off in record time and saving you lots of money.

The Highest payment pay off – Targeting number 2 and 3 on the list above

This strategy works best if you have a bunch of small loans and you have the money to pay them off.  The strategy is to reduce the length of time and the amount of money you use to pay off these debts.  You can choose either the debt that has the highest monthly payment or the least number of payments left.  Using the latter method will greatly reduce your monthly payments faster.  It will leave you with more money every month and especially good for those who are struggling with their finances.

In summary, paying the debt with the highest monthly payment first has the overwhelmingly biggest effect on the amount of money in your bank account.  If you pay the loan with least amount of payments first, you will see a faster, not more advantageous, effect on your bank account.

Using these 3 methods helped me to pay off my credit card debt, get out of debt quickly and live the debt free lifestyle that I had dreamed of.  If it worked for me it can work for you too.

Part I of the plan I used to pay off my credit cards

Before you can create a family budget plan you need to know your financial situation.  First you need to know how much your bring home pay is monthly.  You then need to get a tally on how much you are spending on all the groceries, utility bills, cell phone bills, etc.  Once you figure this out you will know how much you have left to spend on other things.

Making a family budget plan is just writing down all the things you pay for on a regular basis and the amount of each item.  After you do this you need to list all the things that happen periodically throughout the year such as insurance, car maintenance, etc.  The more you can list the better off you will be.  You may come to find, like many other people that their money suddenly runs out.  This means one of two things.  That you have overestimated how much you have to pay for some things or that you don't make enough money to cover all of your bills.  Despite learning that the latter situation is yours, you need to know this.

Family Money Management Tips

Make sure that you are including all the things you regularly pay for and those things that are only paid once or twice a year.  Make sure to leave some money open to save in an emergency fund account for a rainy day and also for an item you may have forgotten to budget for such as that morning cup of coffee.  Also remember to budget for fun stuff like vacations or money you spend eating out.  Include everyone when creating your family budget plan; that way everyone will know what amounts are budgeted for what item and will prevent any squabbles about how money is spent.

Many people use credit cards to buy goods and services because of the convenience of carrying that plastic card verses carrying cash.  The unfortunate reality about this is that it takes about one minute to sign the credit card receipt but many years to pay it off.  As we continue to heavily increase the amount of debt we owe, the monthly payment slowly increases, but not enough to keep up with the higher debt we are building.  So before you know it, the amount of debt owed in comparison to your monthly payment could be 100 fold.

One of the first ways of getting out of credit card debt is the most obvious.  Stop using your credit cards.  For some this relatively simple step is easier said than done.  But you can't begin to think about getting out of credit card debt if you are constantly increasing your debt.  Think about it.  Does that make sense?  You are trying to find a way of getting out of credit card debt, yet at the same time going deeper into debt by continuing to make charges on your credit card?  No it doesn't make any sense.  And that's why you have to put the credit cards away.

Yes, if you stopped using your credit cards and made your monthly payments, eventually sometime in the next decade or so and many thousands of dollars later, you would pay off your credit card debt.  However, there are some steps you can put into place so that you can accelerate getting out of credit card debt quicker. Make a list of all of your monthly expenses and how much you bring home monthly in your paycheck. Look at your bank statements to make sure you have listed all of your expenses.  Gather all of your latest credit card, loan and mortgage statements.

And now that you have this information you are perfectly positioned to put in place a totally customized monthly budget plan just for you.

Yes it's true.  You will have to create a family budget, or a personal budget for the single people, to track your money.  I don't want you to look at a budget as a bad thing.  Your objective here is getting out of credit card debt.  You have to put a plan in place to do this.  Your budget is your plan of attack and nothing more.  It is adjustable and flexible and most of all a tracking tool.

William Feather said "A budget tells us what we can't afford, but it doesn't keep us from buying it."

If you are serious about getting out of credit card debt, you will have to take the necessary steps, even if these steps may not be pleasant, to set up a plan for yourself to create a debt free life.  getting out of credit card debt is something you can start doing beginning this very moment.

One of the first steps you can make to get out of debt is to fess up with yourself to the amount of debt that you are in.  If you make a list of all your bills and add up the debt you owe, many times this amount can be a great shock to you.  But it is something that is needed to move on to the next step of getting rid of debt.

If you are finding this step a stressful one, the best way that you can handle this is to stay calm and realize that all of this is necessary to get rid of debt.  It took some time for you to get into debt and the same will happen for you to get out of debt.  But just remember that it is a situation that you can get under control.

Now that you know the amount of your debt it is time to make a plan to get rid of your debt.  The plan has to come in the form of a budget.  A budget is a guide to help you direct your money to things to achieve a pre-determined goal.  In this case your goal is to get rid of your debt.

Once you have determined what your budget is you need to put as money extra money towards your debt as possible.  You can do this by either making more money or cutting expenses to free up money.  Spend some time brainstorming and you just may find a few things that you never thought of to save money.  Soon the question of "how do I get out of debt" will be one in the history books of your life.