So you’ve decided it’s time to pay off your credit cards and get rid of that debt. Great! If you’re serious about tackling debt, you need to come up with a clear and achievable credit card payoff plan.
A credit card payoff plan is a step-by-step approach to paying off your credit card debt. You can create a credit card payoff plan on your own, using a credit card payoff calculator or app, or with help from professionals. This article will show you how to create a credit card payoff plan on your own, using an app, and with help from debt professionals.
How to Create a Credit Card Payoff Plan
Developing a credit card payoff plan can be tough if you don’t know where to start. To make it easier, we’ve broken it down into steps. Here’s how to create a credit card payoff plan when you have a specific debt-free date in mind:
1. Determine How Much You Owe
Gather together all of your credit card bills and use a calculator to add up how much you owe in total. This number may be larger or smaller than you expected, but it’s important to be accurate in order to come up with the right credit card payoff plan.
2. Calculate Your New Monthly Payments
Next, divide your total debt amount by how fast you want to get out of debt. For example, if you intend to pay everything off within a year, divide your total debt amount by 12. The number that you end up with will be approximately what you need to pay each month in order to get out of debt. Keep in mind that with interest, you may be left with a small balance at the end of the repayment period.
3. Make Necessary Adjustments
You may want to adjust this payoff plan based on your budget and how much you can afford to pay each month. It may take you longer than you initially thought, or you might be paying more each month. Before you commit to a payoff plan, make sure your budget can handle it.
4. Pay Off Your Debt
Focus on enacting your payoff plan and follow through until you get out of debt. Don’t fall into the trap of paying off one card with another. Avoid taking on additional debt and pay close attention to your spending. Try to stay conscious and goal oriented so that your credit card payoff plan doesn’t get derailed. If it does, do your best to get back on track as quickly as possible.
5. Consider Alternative Payoff Approaches
If you aren’t able to pay a consistent amount each month according to your plan, there are other ways to get out of debt on your own, like the “debt avalanche” or “debt snowball” methods. These debt payoff methods could get you out of debt faster, without being tied to a specific monthly payment amount.
How to Create a Credit Card Payoff Plan with a Credit Card Payoff Calculator or App
Many people find online credit card payoff calculators helpful. Websites like Credit Karma have Debt Paydown Calculators where you can plug in your information and find out how long it will take you to get out of debt. This is a useful tool for figuring out how much you can afford to pay each month.
While these calculators factor in your current debt and minimum payments, they don’t always tell you how to create a credit card payoff plan. That’s where debt payoff apps may be helpful. There are many apps available that can actually set you up with a plan to get out of debt faster.
A debt payoff app can help you track your payments and keep you on schedule. These apps allow you to keep all your debts in one place and, easily track your progress, and even send you alerts when it’s time to pay your bills. Instead of just doing it on your own, a debt payoff app will walk you through what you need to do in order to become debt-free.
Read Next: 5 Debt Payoff Apps You’ll Want to Use Now
How to Get Help Creating a Credit Card Payoff Plan
A debt payoff calculator is useful, and a debt payoff app can be especially helpful. However, neither will necessarily deal with the root of your debt problem.
If you’re overwhelmed with debt, you may struggle to get a handle on it on your own. Luckily, there are professionals who will work with you to develop a credit card payoff plan. Both credit counseling or a debt settlement program might be right for you.
Credit counseling will help you develop the skills you need to tackle debt on your own. If you’re not sure how to go about paying off your debt, working directly with a credit counselor will clarify much of that for you. A credit counselor will look at your situation and determine the best course of action.
If you’re in a significant amount of debt, credit counseling agencies may offer you a debt management plan to help you organize your finances and get out of debt for good. With a debt management plan, your credit counseling agency will work with your creditors to renegotiate the rates and terms of your accounts and set you up with a new payment schedule.
A debt management plan usually lasts from 30-60 months, depending on your level of debt and your budget. Although you’ll have to pay a fee for credit counseling services, it may end up saving you a significant amount on interest in the long run.
If you’re dealing with over $10,000 in debt and can’t afford your current monthly minimum payments, debt settlement may be right for you. With debt settlement, you work with a company who will set you up with a plan that gets you out of debt faster, for an amount you can afford. You follow this plan by saving money into an account. Once you have enough saved, the company starts reaching out to your creditors in order to get them to accept a lower payment on the debt—also called a settlement.
Debt settlement could save you money and get you out of debt in as little as 24-48 months. But in order to qualify, you need to show that you got into debt because of a financial hardship, like divorce, job loss, or another unexpected expense.
Whether your choose to go it alone, enroll in credit counseling, or get help with a debt settlement company, you’ve already taken the first and most important step in paying off your credit card debt simply by educating yourself about your options. If you’re still not sure what’s right for you, you can request a free debt evaluation or speak with one of our Certified Debt Consultants by calling 800-910-0065 .