When it comes to financial downers, there’s nothing worse than credit card debt. It makes it feel like we’re taking one step forward and two steps back in terms of our finances, and is the darkest of clouds hanging over our heads.
It can be easy to push it aside and pretend it doesn’t exist (@ me), but facing it head-on is the only way to truly tackle it. If you’ve racked up a lot of debt, paying it off is going to take time and patience, but there are still tricks to paying it off faster — so you can get back to going out for happy hour margaritas without guilt.
There are three main methods that are recommended to use to pay off your credit card debt based on what fits your current finances. Here, we break them down and dive into other tricks to help your mentality when you’re tackling your debt.
1. The Avalanche Method
With the avalanche method, you pay off your credit card debt in order from cards with the most interest to the least. Here’s how it works:
You make the minimum payment on each of your credit cards, and then put as much money as possible toward the rest of your debt — starting with the debt with the highest interest. You continue to repeat until your debt is paid off.
For this, it’s vital to always pay the minimum amount required for each account. The pro of this method is that it will help you pay off debt with as little interest as possible, but the downside is that it will take you longer to see a big dent of progress in your debt.
How to start
Step 1: Figure out how much money you can afford to pay off on all your debt now, then make a list of all your current balances.
Step 2: Make the minimum payment required on all of your cards.
Step 3: Put the rest of the money left in your set budget toward the debt with the highest interest rate.
Step 4: Once that’s paid off, repeat.
2. The Snowball Method
The debt snowball is when you pay off debt in order from your smallest debt to your largest. You make the minimum payments on all of your debts, except for your smallest one, which you pay as much as possible on. Then you repeat in order of debt from smallest to largest until your debt is gone.
The biggest perk of the snowball method is that you feel like you’re making a lot of progress in your debt, because full amounts are getting checked off the list. The downside is that it ignores interest rates, so you could be racking up higher interest rates than you would with other methods.
How to start
Step 1: Figure how much you can afford to pay off on your debt, then list exactly how much you owe on each card from the smallest debt to the largest.
Step 2: Make the minimum payments on all of your cards — except the smallest. Pay the smallest card off in full (or the maximum you can afford at the time).
Step 3: Repeat on all debts from smallest to largest.
3. The Snowflake Method
The debt snowflake method focuses on utilizing your smaller savings to pay off your debt. You use your small, day-to-day savings to make your way to zero debt. For example, if you have a side hustle and receive a payment outside of your normal paycheck, you immediately put the entirety of it toward your debt. The small, continual payments add up faster than you’d think.
How to start
Step 1: Make a list of of all of your debts and how much you can afford to pay off now.
Step 2: Pay all monthly minimums on each card.
Step 3: Gather day-to-day savings and extra funds, and figure out how much you should be expecting that month. In addition to the monthly minimums, start putting those small earnings toward your debt immediately.
4. Pause Your Credit Card Use
Paying off your credit card debt gets a lot more difficult when you’re continually adding to it. While you’re chipping away at your debt, try to make use of your debit cards, rather than using credit. This way, you won’t be cancelling out your payments by spending more money on your credit card every month.
5. Don’t focus on the total amount due
If you focus entirely on the total amount of debt you have, it can be intimidating and absolutely depressing. Breaking it down month by month can be anxiety-provoking in that it’s hard to plan for exactly what each month is going to entail — especially if you have an inconsistent income. Instead, break it down by the amount you want to pay quarterly.
Know the exact amount you want to pay off each quarter, and adjust your payments every month to what fits your needs and what you can afford to pay. That way, you won’t feel like you fell off the wagon if something comes up one month that leads you to need to pay less than your goal.