Pay Stationed: How to properly pay off credit card debt

The thought of paying off credit card debt seems daunting and runs parallel with the total amount of debt you have, and the general thought is to simply pay as much as you can on what you owe, when you can.

But that method is a bit haphazard in that you could potentially be allocating your funds better and taking other factors in mind when paying off debt. While some financial and money experts agree on one way to tackle credit card debt, others differ wholeheartedly and implement a plan of attack that is far removed from their equally savvy counterparts.

So, is there really a proper or right way to pay off debt?

For starters, when considering debt, you have to take into account your budget and how much you are putting toward unsecured credit card debt specifically by factoring in your minimum monthly payments.

The best method to pay off debt is to focus on your smallest debt and begin paying as much as you can toward it to pay it down and ultimately off as quickly as possible, while still maintaining the minimum payments on all your other debt. This method works two fold: not only are you eliminating debt by focusing from small to large credit card balances but you’re also seeing much needed progress in the face of what can be described as difficult, as far as paying off debt or dealing with credit card payments.

The trick is once you pay off that first (and smallest balance) then you take that amount of money you’ve been paying and put it toward the next highest balance you have, plus the minimum payment (because you’ve already been paying that too, and have it budgeted).

For example, if you pay $300 toward your smallest account and the next highest balance you have carries a minimum payment of $150, that means once the first account is done, you’ll have budgeted $450 toward that next credit card debt payment, so that $150 minimum payment goes up to $450 and then you’ll begin to see how this domino affect and increased payments lead to higher balances falling by the wayside as well.

Some would argue that interest rates should play into this equation, but they don’t. That isn’t to suggest that if you have a 30 percent rate on one card and nine on the other, that you can’t rethink the process, but what is important with the smallest to largest theory is you actually see a dent being made what was originally thought to be an insurmountable amount of debt.

You can’t underestimate just how great that feels in the long run of getting debt free for good.

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