Recently, I’ve been reflecting upon the past year and making plans for this year. And I’ve obviously been encouraging you to do the same. One of the things that comes up a lot for my clients and readers is that their big goal is to get out of debt. But sometimes, it can feel impossible to do it. Many of you don’t know where to start or which strategies to employ. And when you don’t know where to start, it feels too overwhelming to do anything. So this week, I’m writing about the steps you need to take to pay down your credit card debt. If you want more ideas, tune into the Money Circle podcast to learn creative ways to pay off your credit card or other debt.

Stop Using Your Credit Card

Most people don’t like to hear it but if you want to pay off your credit card debt, you have to stop using the card all together. You might think that you’re consciously paying off any additional charges on the card, but balances can increase faster than you realize, especially when high interest rates are in play. Plus, if you’re still using your credit card, you’ll still likely be using the behaviors that got you into debt in the first place. Taking a break from using your credit cards will force you to practice sticking to your budget and living within your means. So do what you need to do to avoid using your credit cards. Cut them up, freeze them in a block of ice, lock them in a drawer, or give them to a trusted friend. Whatever you know will be most effective, do that!

Get Clear On Your Budget

It’s good practice to get clear on your budget regularly. I recommend revisiting your budget at least every quarter so that you know that everything is functioning properly. It also gives you the opportunity to make changes and adjustments as needed. This is especially important when you’re taking on a new financial goal like paying off debt. So take this moment to get clarity around your budget. Answer these questions for yourself:

Once you have clear answers to these questions, plug them into a spreadsheet or budgeting app so that you can go back and review when necessary.

Figure Out How Much You Can Afford to Pay

Once you have done the budget exercise outlined above, it’s time to figure out how much you can actually afford to put towards your debt. Many of my friends and clients try to be super aggressive when it comes to paying down debt or building up savings. And that’s a great impulse! But the truth is that you have to fit these goals into your current life circumstances. If you over-commit, you can put yourself in a position where you need to use your credit cards again anyway. So look at the leftover number from the exercise above. How much of that money can you realistically allocate towards your debt? You should overestimate how much you need to spend on flex spending each month so that you don’t have to rely on your credit cards if you overspend.

Choose a Payoff Method

Once you’ve figured out how much you can realistically afford to put towards your debt each month, it’s time to figure out your approach. This specifically applies if you have more than one credit card or type of debt you’re trying to pay off. Basically, there are two options:

The payoff method you choose if going to depend on your personality and the type of motivation you need. If you thrive when you have small wins more frequently, the snowball method will be right for you. If you are more motivated by saving the most in interest charges, the avalanche method will be best. Ultimately, it’s up to you and what you think you’ll be most likely to stick to.


A repayment plan is only effective if you stick to it! And it only works if you have the money to allocate towards it. That’s why payment automation is so important. I’m sure you’ve used auto-pay in your life, whether it was for your utilities or student loans. It makes sure that you are paying your bills whether you remember to or not. The same idea applies when you set up auto-pay for your credit cards or other debts. So once you’ve chosen the amount you can afford to pay each month, set it up so that amount is automatically paid towards your credit cards monthly.

Generate Additional Income

The truth is, oftentimes the only solution to your financial situation is to increase the amount of money you have coming in. I’ve had clients that have cut out as much spending as possible and they are still struggling to make ends meet, because they just don’t have enough income. If that’s you, and you also want to get your debt balance down, you have to figure out how to generate more income. Perhaps you ask for a raise at work. Maybe you apply for higher-paying jobs. Perhaps you get a part-time job somewhere. Or maybe you start charging for something you know you’re good at, like copyediting or crafts.

Use Windfalls to Your Advantage

To be honest, many people don’t have enough money to spare on a monthly basis to make a dent on their debt. But that doesn’t mean you have no other options for paying down your debt. It’s important to use windfalls to your advantage. What’s a windfall? Basically, it’s a larger amount of money that comes to you when you weren’t necessarily expecting it or relying on it. A windfall could be a large gift from a family member, an inheritance, a tax refund, and the like. If and when these windfalls come to you, you should use the majority of them to pay down your debt. Of course, it’s important to do something fun when you get extra money, so allocate 10 percent of the windfall towards something just for you and put the rest towards your debt. You’ll pay down your debt much faster this way.

Decide If Consolidation Is Right For You

Some people can feel discouraged or frustrated when they have multiple debts to pay back, with varying interest rates and several accounts to pay back at once. And sometimes high interest rates can make it very difficult or even impossible to make your minimum monthly payments, let alone make larger payments. This is when debt consolidation might be a great option. This could look like doing a balance transfer to a credit card with a zero percent interest introductory rate. Many of these cards allow you to pay back your balance interest-free over 12 to 24 months. The key here is to make sure you don’t use any of your credit cards for anything else while you’re paying down the balance. It’s also important to note that you have limited time to pay this off before the interest kicks in, so keep that in mind!

Another option is getting a personal loan for the amount that you owe on your credit cards. Once approved, you get the money in a lump sum, which you would then use to pay off your credit cards. After that, you would make fixed monthly payments for a set amount of time. Your credit history will determine whether or not you are approved for a personal loan, as well as the interest terms associated with it. Again, the key here is that you don’t continue using your credit cards after you’ve gotten the personal loan. Doing that will just make sure that you have double debt. You should also make sure that you immediately use the money to pay off your credit cards. Don’t start spending it on other things!

Learn more about debt consolidation here.

If paying off credit card debt is one of your goals this year, I wish you luck! If you need more support staying motivated or accountable, join the Money Circle Facebook group or schedule a free discovery call with me!