• Ethan Lang

How To Attack Credit Card Debt

Updated: May 5

Many people in the world we live in today were never educated about how to utilize credit cards properly. Because of this, many Americans are plagued by an abundant amount of credit card debt. Today, we are going to talk about the two best ways to get out of this horrendous debt and then talk about a game plan to stay out of debt.


I'm not saying that credit cards are bad like most professionals believe today. However, I do think if one does not have the proper knowledge about credit cards, the consequences can and will be horrendous.


I also understand that credit card debt is not the only debt one can put themselves through, so we will discuss how to get out of all different types of debt.


Two Best Ways To Get Out Of Debt

This Table Is To Be Used As An Example For The Two Ways To Pay Off Debt

1. Pay Highest Debt First


With this method, the game plan would be to attack the credit card debt first because it has the highest interest rate. Mathematically speaking, this would be the best option because the credit card will accrue more interest overtime then the other debts because it has an interest rate of over 10% more than the other loans. After you pay off the credit card debt, you would then move to your car loan because it has the second-highest interest rate of 5%. This loan would not take long to pay off because it is only $2,000. Upon paying off this debt, you would then attack your final debt, which is the student loans.


This option for paying off debt proves better than the second option I'm giving you today. However, it would sometimes be hard to see yourself making progress because over half of all of your debt is just from your credit card. With this said, it might be better for some to see themselves making progress to use the other method called the debt snowball.



2. The Debt Snowball


This method was first popularized by none other than Dave Ramsey himself. Personally, at first, I did not care for this strategy at all because I saw the math behind the numbers, and it didn't make sense. Despite this, I started to agree with Dave Ramsey upon researching the full picture. If we're speaking purely based on mathematics, this person should never have been in debt in the first place, so why would you think the best way to pay off this debt would be mathematical? This person would need to see themselves truly making progress.


The plan of attack for Dave Ramsey’s snowball method is to pay off the smallest debt first regardless of the interest rate. In this case, presented above, you would the first pay off the $2,000 car loan at 5% because it is a smallest loan present. Once this is paid off, you would then move to the second smallest debt, which was the student loan payment at 3.5%. from there, you would finally pay off the $11,000 credit card debt.


Yes, this method would take longer for some people, but having the peace of mind that their car loan was paid off would give them a sense of motivation and determination to pay off their other debts faster. This method is not the mathematical method but rather the psychological method.



So, Which Is Right For You?


This is very hard for me to tell you, but think about it this way. Would the boost in motivation aid you in paying off the debts faster than in a mathematical way? I mean, you know yourself better than anyone else, so make your decision based on the answer to that question.



Final Thoughts


Falling into bad debt, such as credit card debt, can be catastrophic for most people. However, there are methods to aid you in getting out. So, if you find yourself stuck and a large amount of credit card debt or other debts, use one of these methods as a plan of attack to take out these debts as soon as possible.



Disclaimer: I am not a financial advisor, so please review all of this advice with your CFP or financial advisor first.

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