Credit card debt can be eliminated quickly using financial tools such as a debt planner. This article looks at a debt reduction plan to clear credit card debt, which could mean the start of a debt free life.
Set out a debt planner
A debt planner is an important financial tool that is easy to set out. A debt planner is simply a sheet with all household income and expenditure. This means two lists: all money that comes into the household against all money that is spent during a monthly period.
The point of the debt planner is to assess how expenditure can be decreased with the intention of using saved money to help clear credit card debts. The more money that can be put towards the credit card debt, the quicker the debt can be eliminated.
Interest fees on credit card debts can be reduced by paying more to the debt every month. A debt planner can be used as part of a debt reduction plan to show how long it will take to clear off credit card debts by increasing the repayment amount gradually every month. Set an intended credit card debt free date and then work out how much the monthly payments should be to reach this goal. If additional income can be found by cutting costs around the home, then this should go towards repaying costly credit card debts.
Sensible credit card clearing methods
Reason for clearing debts
Eliminating credit card debts rapidly means using sensible financial debt reduction methods. Credit cards are generally categorised as high interest debts due to the annual percentage rates involved and the amount of time needed to clear them. Most people will have other debts and these also have a priority. Some people will class the need to pay off student loans as a high priority. Students loans are actually low priority due to the very low interest rates involved. Clearing debt quickly means leaving low interest debts until last to be paid while focusing on making highr repayments to high interest debts such as credit cards. Tips
Use a debt planner to assess the priority of all household debts such as loans and credit cards. Place high interest debts such as credit cards at the top of the list and use the most money to repay these debts first. Reducing high interest debts quickly will mean reducing the amount of interest payments and paying more to the actual debt owed than to the lender's interest fees.
The quicker the debt can be paid, the more disposable income will be left every month, meaning more can be paid to the credit card debt the following month, thus representing an ongoing debt reduction plan.