Hack To Pay Off Debt

What Debt You Should Pay Off

Ideally, you should pay off all your debt.  One exception I make to the rule is your mortgage.  One trick that might benefit you though is to check for a 15-year mortgage.  These generally have similar payments.  They will save you thousands over the course of the loan.  The main debt you have to pay off is credit cards.  They will kill you.  Cash flow is key to income success.  If your cash is all flowing out in credit card payments you will not get ahead.  Following these tips you will get ahead.

What Is The First Thing You Can Do

Here is the first step to this hack to pay off your debt.  Get out all of your credit card balances and monthly payments.  Put them down on paper.  You can use a spreadsheet or write it down.  The key is to get the total balance due and your minimum payment.

Once you have this info compiled think of an amount that you can afford to spend extra.  It’s hard to think of paying extra.  Think of something you can give up to afford an extra amount.  What I did was just committed to losing about $200 per paycheck in earnings.  Now, not everyone can afford that.  Think of it on a paycheck level if you can though.  Could you give up $25 a paycheck?

What Is A Hack To Pay Off Debt

Here is the hack to pay off your debt.  Organize your credit card balances from lowest to highest.  Now, what is the minimum monthly payment on that lowest one?  Take that and divide it by paychecks in a month.  Do you get paid every other week or twice a month?  I think it is safe to assume most do.  You divide the minimum payment by 2, if this is your case.  Now add $25 per paycheck to it.  Let’s say your minimum monthly payment on that card is $10.  Divide that by 2 which is $5 and add the $25 per paycheck we decided we would give up for a total of $30.

Every paycheck we are going to pay that credit card company $30.  We are going to do that until the full balance is zero.  Remember to put the cards away.  You can’t add to credit card debt and pay it off at the same time.  If the balance is $300 then in 10 paychecks that card will be paid off.  Then you move to the next card.

Ready to Pay Off Your Next Card?

When you are ready to pay off your next credit card.  Take that $30 a paycheck we were already spending and add it to the minimum monthly payment of your next lowest balance.  Let’s say your next lowest balance has a $30 minimum payment.  Divide that by your paychecks, so $15.  Add the $30 per paycheck we were already paying for $45.  This is done every paycheck pay $45 to that credit card company.  Do this until you have paid off your second one.

The trick here is that the balances will disappear and you get a sense of accomplishment faster.  Notice I am paying no attention to interest.  It doesn’t matter that much.  We just have a goal to pay them all of.  Don’t invest in anything, do nothing but pay off this debt.  You will not find another investment that gives you a better return.  Having that cash that you are paying on credit cards back will be investable once all are paid off.

Example Hack I Used To Pay Off My Debt

Here’s my story.  I had a credit score of a little under 600.  This was mostly driven by high balances.  See if you use more than 30% of your available credit it is negative.  So if you have a $1000 credit card limit, less than $300 should be on it.  If your balance is higher than that you are damaging your credit.

My lowest card had a balance of $700 and a minimum payment of $30.  I took $215 a paycheck (I went hardcore) and paid that thing off in 6 weeks.  Then I took $245 and paid on my next lowest balance about $1500.  Gone in about 12 weeks.  I just keep going and going.  I soon find more money to throw at it each paycheck.  It’s so exciting watching those balances disappear.  Know that soon I will have them all paid off and have hundreds of extra per paycheck motivates me.

Conclusion is, my friends, is how you get out of credit card debt.  My credit score is almost 800 now.

Again:

  1.  List your cards balances from smallest to largest with minimum monthly payment
  2. Divide minimum payment by pachecks you will receive each month
  3. Find an amount you can live without each payday
  4. Make a payment every payday the amount you can live without and what you got as a result in #2.
  5. Carry the payment you make each paycheck plus do #2 again with your next card.

This will erraticate your credit card data faster than ever!  What a hack to debt!

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