3 Steps to Finally Pay Off Your Credit Cards

So many people get this wrong. Here's what you actually need to do.

I see people make the same mistake with credit card debt all the time. They get a little extra money and immediately throw it at their credit cards. It feels responsible. It feels like progress. But then the car needs a repair. The dog gets sick. A medical bill shows up. Something in the house breaks. And right back on the credit card it goes.

If you actually want to break the cycle of credit card debt, there is an order I want you to follow.

Step #1: Stop using your credit cards.

Yep. I know this can be a hard transition. Move all of your expenses to your debit card, including your recurring expenses. The goal is to pay off your credit cards, and when you are simultaneously spending on the cards AND making payments toward them, it becomes really hard to tell if you are actually paying down debt or simply paying for what you just spent.

You need to stop adding to the debt and learn how to make your paycheck work for the life you are currently living. So first, stop using the cards.

Step #2: Build savings BEFORE you start aggressively paying off debt.

This is the step so many people want to skip. Please don't. If you have an extra $500, your instinct might be to immediately throw it at a credit card. But what happens when you need an unexpected car repair next month and you don't have any money in savings? You put it on the credit card.

Now all that work you did paying down the card has been undone by life happening. And life WILL happen. That is how people get stuck in the cycle of paying down their credit cards, running them back up, paying them down again, and wondering why they can never seem to get ahead.

Before you start aggressively paying off your cards, build $1,000–$5,000 in savings. How much you need depends on your life, your expenses, and what would give you enough cushion to handle the normal unexpected stuff without reaching for a credit card.

Keep making the minimum payments on all of your cards, but for now, put your extra money into savings. You are building the foundation that will allow you to actually STAY out of credit card debt.

Step #3: Pick ONE card and go after it.

Once you have your savings cushion, it's time to attack the debt. Start by getting clear on exactly what you owe. Write down every credit card, the balance, the minimum payment, and the interest rate.

Then choose your strategy. You can start with the smallest balance first, often called the debt snowball, or you can start with the highest interest rate first, often called the debt avalanche.

Honestly, I care a lot less about which method you choose than I do about you choosing one that you will actually stick with. If knocking out a small card quickly is going to make you feel like a freaking rockstar and motivate you to keep going, start there. If knowing you are eliminating your highest-interest debt first gives you the most satisfaction, do that.

Then put every extra dollar toward ONE card. Not $100 on this card, $50 on that one, and another $75 somewhere else. One card. Keep making the minimum payments on everything else and attack your chosen card until it is gone.

Once that card is paid off, take all the money you were paying toward it, including its old minimum payment, and roll it onto the next card. Then keep going until they are all gone.

This is a game of consistency and patience. You are not just paying off credit cards. You are building an entirely new way of doing money so you don't end up right back where you started.

Don't let those high credit card interest rates send you into a frenzy where you feel like you have to throw every available dollar at the debt RIGHT NOW. This is not a quick fix. Follow the plan, build your savings, create the systems, and celebrate every victory along the way.

Because the goal isn't just to get to $0 in credit card debt. The goal is to build the financial stability and new money habits that make sure you never have to rely on those cards again.

Disclaimer: I am an educator, not your personal financial advisor. Please make sure to do your own research before moving forward with any actions discussed in this blog post. 

Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won't experience any loss when investing. Always remember to make smart decisions and do your own research!