Arguably the most difficult part about repaying credit card debt is finding how little progress you are making on a month-by-month basis. This slow progress has a lot to do with the high interest costs associated with credit card debt, but also with the lower payments that are being made (let’s face it, even with mortgage rates as low as they are, when you look at your mortgage statement on a month-by-month basis, you are not make much progress there either).
Ideally, you should only look at your credit card statements after several months, at least. Better yet, continue making your regular debt repayment payments and review the statement after a year.
There are two other things you can do so that you see progress and get to feel encouraged by paying off debt.
1. Pay the smaller balance first. This means you should funnel as much as you possibly can to the credit card or loan with the smaller balance even if the rate is higher than other credit cards or loans. Also known as the debt snowball method, the main purpose of this tactic is to get your spirits up as you pay this smaller debt off first. Not only will be feel successful in your efforts, but you will see just how great you feel after dedicating so much time and resources to repaying debt. Ideally, you will want to repay your other debt just as aggressively and you will be more convinced that there really light at the end of tunnel.
2. Use a repayment schedule to plot out your debt repayment plan over the course of however many years it will take to repay it. Even if it will take you six years to repay your debt, plot out your scheduled balances. After receiving your payment every month, match the balance to the balance on the schedule. Even though the balance will not be deteriorating as quickly as you want, fast forward to another period on your schedule and see that you are still on track to have it paid out after however many years. Knowing that you are “on track” makes sticking to the plan a lot easier.
As well, when you use method #2 above, you do not have to focus first on lower balances; in fact, it is recommended you focus on whatever debt is costing you the most in terms of rate. Once the higher-rate debt is repaid, your cash will go a lot farther when it comes to your debt repayment plans.
Chris has more than 16 years of experience in teh financial services industry. He maintains a debt-related website at HowToRepayDebt.com that aims to provide people with information on Debt Help.
As well, Chris maintains an information-based website on how to determine what is the Best Queen-Size Mattress for your specific needs.
