If you currently find yourself caught in a revolving door of debt, you’re certainly not alone—the average American household has racked up close to $16,000 in credit card balances. But just because you have plenty of company on the credit card carousel, doesn’t mean you don’t want to jump off of it, ASAP. Revolving debt is toxic, typically high interest, and can quickly spiral out of control.
To break free, you need a clear plan of attack. That plan should free up extra cash for digging away at your current debts. It should also set you up for future success by addressing the issues that may have caught you up in the cycle to begin with—whether that was unexpected expenses or living a little bit beyond your means. Here are some smart strategies to start.
Pick Out Your Public Enemy Number One
You could take a couple different tactics when targeting credit card debt, but the method that could often save you the most money over the long run is to take aim at your highest interest debt first.
To follow this method, you would write down a list of all your credit card debt balances and their corresponding interest rates. Then you would order the list from highest to lowest interest rates. Now see that debt at the top of your list? That would be your first target. After making the minimum monthly payments on each of your other debts, you would throw everything extra at that top offender. Once that debt was paid off, you’d move on to the next one down the list, and so on until you reached debt-free.
See Where You Stand
In order to beat back debt for good, you’ll need to get serious about making a monthly budget. Smartphone apps can work great for this, or you can always use a good old-fashioned spreadsheet.
For one full month, try to carefully track your money, both on its way in and on its way out. This will give you a clear picture of where you may habitually be spending too much, and where you might be able to find funds to pay off your debts faster. After you’ve completed this step, you’ll be ready to make an accurate budget. Your new budget will keep your spending on track so you don’t charge for things you can’t afford right now. It will also allow you to see just how much extra you have left to put toward paying off your debts.