How to Pay Off $10,000 in Credit Card Debt Fast
Having a lot of credit card debt is overwhelming! The mammoth balance looms over you, preventing you from doing more of what you love, keeping you shackled to seemingly endless monthly payments that never move the needle. But before you resign yourself to being in debt forever, know that there is a way out. Here’s how to pay off $10,000 in credit card debt — fast!
Face the debt monster
First things first — you must own up to what you owe. Tallying up the amount might be scary and painful, but you need to know what you’re up against. Check all of your credit card statements and write down creditor names, current balances due, interest rates, and minimum monthly payments. This is your baseline — and the beginning of your debt payoff journey.
Address the underlying cause
Once you know what you’re dealing with, it’s time for some honest introspection about where your credit card debt came from. Was there a major emergency that you didn’t have enough money to cover? Were you living above your means due to FOMO? Or was it something else? Whatever the reason, there’s no judgment here. But recognizing and addressing the why of your debt problem is absolutely critical to slaying it — and preventing it from happening again.
If you don’t have an emergency fund, try to squirrel away a small nest egg (even a few hundred dollars is a good start). That way, you won’t necessarily have to reach for a credit card the next time something unexpected comes up. If you’ve been a bit too spendy, find cheaper alternatives to your favorite things and experiences, and nix any spending that doesn’t truly align with your values.
Create a debt payoff plan
When you’re paying off multiple debts – such as debt from multiple credit cards – there are two main paths you can take: the debt snowball or the debt avalanche. Both are totally valid approaches, but the right one for you will depend on your personality.
The debt snowball method works great if you want to see quick wins and keep your motivation high — particularly early on in the debt repayment process. With this approach, you pay as much as you can towards the credit card with the smallest balance, while paying the minimum due on the other accounts. As each card gets paid off, you allocate the funds earmarked for that bill to the next smallest balance, repeating the process until you’re debt-free. The downside? You may pay more in interest over time.
The debt avalanche method is a good fit if you care more about the math behind the debt than the emotions because you’ll generally pay less interest overall. With this approach, you throw as much money as possible at the credit card with the highest interest rate, only paying the minimum due on the other accounts. As you pay each creditor off, you’ll have more money to put towards the credit card with the next highest interest rate, repeating this process until you’re debt-free. The downside? Paying off that first credit card may take a while depending on how high the balance is.
Pro Tip: You’ll likely be paying off your debt for an extended period of time. So, to keep yourself motivated, regularly think about why you want to be debt-free. Envision your life with that debt gone!
Explore balance transfer credit cards or personal loans
It may seem counterintuitive, but sometimes the best way to tackle your credit card debt is with better debt. If you’ve got good credit, you may want to look at debt consolidation via a 0% interest balance transfer credit card or a lower interest personal loan. There are lots of choices for both out there (you may even get balance transfer credit card offers in the mail) — so you’ll want to shop around for the best deal. If you can cover your existing high-interest debt with one of these lower interest options, you’ll save a ton of money and shorten your repayment period. Plus, with debt consolidation, you’ll only have to make one payment each month instead of several.
Pro Tip: When you apply for your balance transfer credit card or personal loan, request a credit limit that’s just high enough to cover what you owe. That way, you won’t be able to take on any more debt.
Caution: With a balance transfer credit card, you typically must pay off the transferred balance by a certain date to benefit from the 0% interest deal. If you don’t, the card issuer will likely charge you back interest (which pretty much defeats the purpose of getting the card)! Check their advertiser disclosure for details.
Find money in your budget
Take a look at your current spending and try to find ways to scale back. Look for bargains on necessary expenses like groceries, clothing, and household supplies. Negotiate with your car insurance company, cell phone service, and internet provider for better rates or reduced fees. Say no to expensive outings with friends and suggest more budget-friendly alternatives. The possibilities to save some cash are practically endless. The bottom line? By reeling in your spending, you’ll have more money to sock at that monthly credit card bill.
Earn extra money
Since you can only trim your expenses so much, think about how extra money earned can turn into extra payments. Depending on your situation, consider:
- Working a few hours of overtime each week
- Asking for a raise at your current job
- Looking for a higher paying job
- Starting a side hustle — like freelancing or working a part-time job
- Selling your stuff online
Any additional cash flow you generate will go a long way towards paying off your debt!
Pro Tip: When you get a bonus at work, tax refund, or monetary gift, make a lump-sum payment on that debt!
Think twice about debt relief programs
Digging out of debt can be very challenging so it’s natural to seek help with the process. However, be wary of debt relief, debt management, or debt settlement companies that promise they can get your interest rate or credit card account balance reduced by negotiating with your creditors. The truth is, they can’t guarantee those results and following their program could result in major damage to your credit standing. Further, even if their negotiations are successful, the fees they charge for their service may negate any savings granted by your creditors. So, if you’re considering this route, please do your due diligence first.
Pro Tip: Remember, you can negotiate with creditors on your own — seriously. If you’ve got a track record of paying your bill on time, your credit card issuers may agree to lower your interest rate. You’ve got nothing to lose, so call your credit card companies today!
Celebrate wins along the way
Paying off debt can be exhausting. So, as you hit financial milestones, be sure to celebrate those wins. You’ve worked hard and deserve a budget-friendly treat for your efforts. Recognizing how far you’ve come is also a great way to keep you motivated for the next leg of your debt pay off journey.
When you’ve got a mountain of credit card debt standing in your way, paying it off might seem like a pipe dream. Fortunately, that’s not the case at all. This article shows you how to pay off $10,000 in credit card debt. The rest is up to you!
Tell Charlie: What are your favorite debt payoff tips?