It’s important to set realistic and achievable goals for paying down credit card debt. Research has shown this approach increases consistency and leads to greater success than if you try to do too much or too little erratically.
The following three questions are designed to help you figure out how much you can afford to pay off your credit card each month, and how long it will take to clear the debt:
This approach helps you see progress as it occurs and makes dealing with the debt more manageable. It’s also an opportunity to review your spending and make changes to help reduce your debt.
Case Study: Magdalena’s Simple Credit Card Payment Plan
Magdalena owes $5000 on a credit card with an interest rate of 18% p.a. She earns $4000 per month after tax and spends $2400 per month on rent, groceries, petrol and bills. That leaves her with $1600.
Case Study 2: Imran’s Debt Sacrifice
Imran has a credit card with a $10,000 debt and an interest rate of 20.99% p.a. He currently pays $800 per month towards the balance, but wants to pay off his card in under a year.