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Use this option if you have minimal credit card debt that can be paid off in 6-18 months

this may be an ideal option if your total credit card debt is minimal and if you can budget enough disposal income to payoff your credit cards within 6-18 months.

This option will give you the best credit rating protection.

Start by listing your cards:

list all of your credit cards that have a debt balance. Note the card that is charging the highest interest rate — this is the credit card balance that you will pay off first.

you can download our excel worksheet to list your credit card debt

Estimate your repayment schedule:

use the calculator below to schedule an amount each month that you can allocate to pay down your selected high interest-rate credit card.

Include in your budget plan the amount you will need to make minimum payments on all other cards.

1. Use the "Monthly Payment" calculator
   to estimate the amount you need per month to payoff your debt over a given period of time (in months).
   
   — enter the best interest rate you can receive
   — enter the number of years you need to repay the debt
   — press "calculate" to estimate repayment amount
   
   
2. Use the "Repayment Period" calculator
   to estimate the time it will take to payoff your debt with a budgeted fixed amount that you can pay each month.
   
   — enter the best interest rate that you can receive
   — enter the amount you would like to pay
   — press "calculate" to estimate payoff terms
   
   Download our "Debt Payoff" worksheet
   to run your numbers on your desktop: download worksheet

Monthly Payment Repayment Period Debt Balance: $ Debt Balance: $ Interest Rate: % Interest Rate:   % Repayment Term: months Monthly Payment: $ * * Monthly Payment: $ Repayment Period:   years months

Reduce your monthly expenses:

as you pay down your credit card, review our section on lowering your monthly bills in housing, transporation, living, recreation, and more.

Click to view "lowering your bills"

Your monthly cost savings can be used to pay down your credit card faster.

Continue payoff:

once you pay down your high interest-rate credit card, find the next highest interest-rate card and schedule a new repayment plan.

Repeat these steps for each card — paying down the highest interest-rate card first, and on down to the lowest interest-rate card.

Important note:

be sure to view our topic on credit card management techniques — you want to avoid getting yourself back in debt with your credit cards.

Use this option to if you can payoff your credit card debt with 12-36 months

this may be an ideal option if you have significant credit card debt that can be paid off within a short period (12-36 months) and if you maintain a good-to-better credit rating

for information about your credit rating: visit our credit management module

Find transfer balance programs:

if you have a good credit rating, card issuers will solicit you with attractive credit card consolidation (transfer balance) programs.

You may also contact your current credit card issuer about transferring and consolidating other credit card debt.

Inform them that you are shopping to consolidate all or part of your credit card debt under one card — if your credit rating is good, they will want to keep you as a customer.

Find the transfer program that offers a super low interest rate at transfer terms of 6 or more months. Anything less than 6 months is not worth the trouble. Also avoid programs that charge a transfer fee. The fee will wipe away your low-interest savings.

Link to our credit card search for debt transfer programs

Make sure you read the fine print.

List your cards:

List all of your credit cards that have a debt balance. Note the cards that are charging the highest interest rate.

you can download our excel worksheet to list your credit card debt

Payoff your cards:

take the transfer program that offers the best terms — lowest rate, longest term, and zero transfer fees. Use the program's transfer checks to payoff those credit cards listed that have the highest interest rate charges.

If your total credit card debt exceeds the transfer program's credit limit, you may need to use a second or third balance transfer program.

Schedule your pay down amount:

schedule a payoff amount that significantly reduces your consolidated amount during the transfer period.

Download our "Debt Payoff" worksheet
to run your numbers on your desktop: download worksheet

Monthly Payment Repayment Period Debt Balance: $ Debt Balance: $ Interest Rate: % Interest Rate:   % Repayment Term: months Monthly Payment: $ * * Monthly Payment: $ Repayment Period:   years months

Maintain terms:

since most transfer programs offer card consolidation terms of 6-12 or more months — significantly lesser time than what you may need to payoff your card debt — you may need to play the transfer game when one program ends and another begins.

Keep note of other transfer balance offers that come in the mail — hold on to those offers that carry attractive terms.

Be careful not to jump to another transfer program within short periods. Every time you sign up for a transfer program, an inquiry is made to your credit report. You want to limit credit inquiries to "one" inquiry every "six or more" months.

See our discussion on maintaining a good credit rating at our our credit management module

Payoff amount:

if your budgeted monthly payment does not payoff your credit card debt with 12-24 months, you may need to consider a debt consolidation plan

Try to lower your other living costs:

as you pay down your credit card, review our section on lowering your monthly bills in housing, transporation, living, recreation, and more. Your monthly cost savings can be used to pay down your credit card debt faster.

Click to view "lowering your bills"

Important note:

tuck the credit card that has your transfer balance away. Do not use the credit card for any credit card purchases. You want to avoid interest being charged on everyday purchases. Use a different credit card for purchases so that you can take avantage of the 25-day grace period.

Be sure our credit card management techniques — you want to avoid getting yourself back in debt.

Use this option if you have minimal loan debt that can be paid offer within 12-36 months

this may be an ideal option if your budget allows for an extra amount to be used to quickly payoff your loans.

You may consider consolidating your existing loans under a lower rate and budgeting the same amount to payoff your consolidation loan: see consolidation plan

First thing: analyze your budget:

analyze your monthly budget to determine how much money you can allocate for this payoff plan.

Link to our budget planning worksheet: click here

Identity and list your loans:

identify the loans that you would like to payoff. List the loans in order from the lowest loan balance to the highest.

you can download our excel worksheet to list your personal loan debt

Let's illustrate this concept by using the following loan balances with a period of 5 years before the final loan is paid (assuming no additional debt):

	Balance	Payment	Rate
Loan1	$800	$32	12.5%
Loan2	$1200	$40	12.5%
Loan3	$2777	$67	12.5%
Loan4	$8530	$175	8.00%
Loan5	$18997	$453	6.75%
Total Period to payoff final loan: 5 years

Group your loans:

group at least 2 low-balance loans together and pay them off within 6-12 months.

(You may use a credit card transfer program to get the low transfer interest rate during your payoff period).

Once you payoff these two loans, group the next low-balance loan and pay it off quickly over 12-24 months.

This payoff grouping builds a momentum where you erase 1-2 loans quickly from your monthly payment plan. The savings can then be applied to other monthly loan payments to reduce your aggregate loan balances quickly.

Example:

Take the first two loans on your list (Loan1 and Loan2) and group them together.

	Balance	Payment	Rate
Loan1	$800	$32	12.5%
Loan2	$1200	$40	12.5%
Loan3	$2777	$67	12.5%
Loan4	$8530	$175	8.00%
Loan5	$18997	$453	6.75%
Total Period to payoff final loan: 5 years

Set a budgeted payoff plan within 9 months:

— your payoff balance: $2000
— current debt payment: $72 ($32+$40)
— additional payment to payoff within 9 months: $162
— (see calculation)

— total monthly payoff amount: $234 ($72+$162)

The extra $162 per month will need to come from budget planning by reducing other monthly expenses: see lower bills module

note that you will still continue to pay on your other outstanding loan debt

Payoff and group again:

once you have successfully paid off the two loans in 9 months, your current loan portfolio will look like this (assuming no additional debt and payment reduction on your other loans):

 

	Balance	Payment	Rate
Loan1	$0	$0	12.5%
Loan2	$0	$0	12.5%
Loan3	$2372	$67	12.5%
Loan4	$7308	$175	8.00%
Loan5	$15450	$453	6.75%

Now take the next loan and apply the same payoff proceeds to this loan:

— your payoff balance: $2372
— monthly payoff amount: $301 ($234 above + $67 current)
— time needed to payoff: 8.3 months
— (see calculation)

Now after 9 months, you current loan portfolio looks like this (assuming no additional debt and payment reduction on your other loans):

 

	Balance	Payment	Rate
Loan1	$0	$0	12.5%
Loan2	$0	$0	12.5%
Loan3	$0	$0	12.5%
Loan4	$6004	$175	8.00%
Loan5	$11698	$453	6.75%

Continue payoff:

continue your group payoff by taking the next loan and applying the same payoff proceeds:

— your payoff balance: $6004
— monthly payoff amount: $476 ($301 above +$175 current).
— time needed to payoff: 13.2 months
— (see calculation)

After 13 months, your current loan balance will look like this:

	Balance	Payment	Rate
Loan1	$0	$0	12.5%
Loan2	$0	$0	12.5%
Loan3	$0	$0	12.5%
Loan4	$0	$0	8.00%
Loan5	$6079	$453	6.75%

apply the same payoff proceeds to payoff your last loan:

— your payoff balance: $6079
— monthly payoff amount: $929 ($476 above +$453 current).
— time needed to payoff: 6.9 months
— (see calculation)

Summary:

by grouping your low-balance loans together and budgeting an additional $162 for debt payoff, you were able to eliminate this debt within 3 years. That is two years less than allowing these loans to run their term.

The magic of grouping is that it eliminates low balance loans quickly so that you have the motivation and additional funds to pay down your next loans.

Grouping works best when you develop a spending plan that meets your budgeted allowance for living and debt payoff.

See our topic on budget planning

Lower your other living expenses:

review our section on lowering your monthly bills in housing, transporation, living, recreation, and more.

Click to view "lowering your bills"