Pay off Credit Card Debt

At the time of this writing, the average amount of credit card debt per household with credit card debt in the United States, according to, is $14,750. This is a staggering amount of debt for the average American household. Until consumers can successfully take hold of their finances and lower their debt considerably, they can expect to live a life of slavery in order to make their minimum payments.

To completely eliminate credit card debt, consumers must make difficult choices concerning their buying habits and their lifestyles in general. The first decision that needs to be made, and perhaps the most important, is the decision to stop creating new credit card debt. It is certainly a painful realization that people may need to eat more meals at home, or not have as many nice outfits, but it is definitely worth it to get rid of this wealth-destroying beast.

Once the creation of new credit card debt has stopped, it is time to implement a plan to begin eating away at this mountain of debt until it is completely gone, never to return. The best way to do this is to choose the card that has the smallest balance, regardless of the interest rate, then pay minimum payments on all of the other cards, while at the same time pouring every available extra dollar into paying the smallest card balance.

Once the smallest card balance is paid off, begin funneling all of the money that used to go towards the smallest card balance to the next smallest card balance, while still maintaining minimum payments on all of the rest. When this card is paid off, funnel all of the money that used to go to the two smallest cards to the next smallest card balance, and so on. This process will seemingly start out very slowly in the beginning, but after one card is paid off, the amounts available to go toward other cards increase greatly, and this really helps people to pick up the momentum needed to reach their final goal.

This being said, some will argue that consumers should start on the cards that have the highest interest rates first. While this mathematically does make sense, the habit of paying off debt is much easier to forge if one has many small victories along the way. According to Dave Ramsey, personal finance is 80% behavior. Quickly paying off some of the smaller credit card balances and having more money to put towards the others is a great confidence booster and goes a long way towards positively re-enforcing this new behavior. Once all of the credit card balances are completely paid off, consumers can again breathe easily and perhaps begin working on their other forms of debt, so they can truly regain their financial freedom.