Facing an overwhelming credit card mass directly in the face can be extremely intimidating, if not crippling. A friend of mine recently faced this challenge, while trying to get her personal finances in order. She came to me for help, and we put together a feasible plan. First off, we looked at all twelve of her credit cards and put them in a spreadsheet. On the spreadsheet, we listed the total balance, the interest rate and the current month’s payment due. Now, you probably think that we would list them in order of highest interest rate to lowest interest rate, right? Wrong. We listed them in order from smallest balance to largest balance.

So, why did we list them in that order? Simple answer. Paying off the balances one by one will create momentum. It will create a sense of accomplishment one card at a time. If you try to tackle the largest card first, it will take a while before you see the “payoff” of your hard work and discipline. One reason that these bills have piled up and become unmanageable is partly due to fear and a feeling of helplessness. If you focus, at least at the beginning of your journey to being debt free, on paying off the smallest cards first, while paying the minimum on the larger balance cards, you will gain a feeling that “Hey, I can do this. This isn’t as overwhelming as I thought.” Beginning the journey to financial freedom begins with baby steps.

While your focus will be on paying more on your smaller balance cards, you will need to continue to make payments on all your cards. My recommendation is to pay the minimum due on all but one card and work your way from there.

As mentioned, my friend came to me with 12 overwhelming credit card bills. We started her on the smallest to largest track, and she focused on this payoff method for the first 9 months of her journey. At the end of 9 months, she had paid off 4 cards in full! With 4 cards removed from the initial 12, she had built some momentum and could see the light at the end of the tunnel. With this newfound confidence and small victories, my friend was ready to reevaluate her plan of attack and move onto those cards that were killing her month after month with their high interest rates.

At this time, we created her another spreadsheet listing all cards with their balances and interest rates. We listed these in order from highest interest rate to lowest interest rate. My friend now had a new plan of attack to tackle these remaining cards. Again, using the one at a time strategy, she paid off each card one by one.

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