Do not know where to start? Start with these expert tips to keep you motivated, pay off debts and save for the future.
For many families, this summer will be about catching up with friends and relatives, taking long deferred trips and getting to know the "new normal" 2021.
But vaccinations and vacations should not be your only goals for the summer . If you are dealing with credit card debt, the summer of 2021 may also be a good time to pay off as much of your debt as possible. Why? Because the interest rates are completely low – which means that the credit card terms are temporary in your favor.
"The Federal Reserve recently announced that it would keep interest rates close to zero, probably until 2023," explains Lawrence Gonzalez, Certified Fraud Examiner (CFE), financial literacy coach and founder of The Neighborhood Finance Guy. "For consumers, this means that banks and credit card companies will increase offers of 0% interest, credit card rewards and balance transfers."
Credit cards not only offer consumers extra rewards and ad-free zero interest rates, but also standard credit card interest rates are still atypically low. While credit card interest rates have risen slightly since the beginning of 2021, current interest rates are still averaging around 16% in April – which means that if you have credit card debt, it can be a very smart move.
But you're probably wondering how to reduce your credit card debt, especially if you do not know where to start? We asked the experts for advice, tips on how to stay motivated and suggestions on how to pay off debt while saving for the future – and created a step-by-step guide to help you pay off your credit card debt this summer.
In this article:
Getting your finances in order
The first step in paying off your credit card debt? Get your finances in order.
"One of the best ways to get started with your debt repayment is to write down all your debts," says Gonzalez. He suggests that you use top budgeting apps like Mint, Personal Capital and YNAB to get a detailed picture of how much debt you currently carry.
These apps also help you track how much money you are making each month and where that money is going. This can help you understand if your debt is related to your daily surplus – or if you usually spend within your means but got into debt because you used credit cards to cover emergencies that you could not pay for in cash.  Once you know how much you are earning and spending – and once you understand how these numbers relate to your current credit card debt – you can start making a plan to reduce your debt and eventually pay it off in full.  Write down why you want to be debt free
Once you have written down your debts – or used a financial app like Mint to write them down for you – it's time to write down why you want to be debt free.
No, seriously. Do not skip this step.
Taking the time to write down why you have decided to pay off your debt can help you stay the course, explains Betty Wang, Certified Financial Planner® (CFP) professional and founder and president of BW Financial Planning. The letter you write yourself today will be a formal commitment to a better financial future – and having the written record on hand will remind you to continue working towards that future, especially if your repayment process takes a long time or involves a little more budgeting and financial tracking. than you are used to.
"Remember why," Wang told us. "Write down all your reasons for paying off your credit cards, and as you struggle, read through all of your reasons for staying motivated."
"Remember Why. … When You Struggle, Read All Your Why to Stay Motivated." ] Once you know how much money you owe and why you want to pay it back, it's time to start making payments – and even if you can come up with your own bespoke debt repayment plan, you'll be much better off using a strategy. which have already been shown to work.
Here are three of the most common repayment strategies:  Debt Snowball Method: Focus on paying your minimum debt first while making the minimum payments on all your other debts.When your minimum debt is paid, move the debt snowball strategy to your next minimum debt.When you pay each debt in turn, the money you can add to your next debt will grow – or, as the name suggests, snowball .
Debt Balance Method: Focus on paying off your highest interest rate first while making minimum payments on all your other debts. Once your highest interest rate is paid, move the debt avalanche strategy toward your second highest interest rate. When you pay off each debt, the money you can put on your next debt will in turn be larger and the money you pay in interest expenses each month will be smaller. Debt Consolidation Method: Use a balance transfer credit card to consolidate your entire credit card debt into a single card – or take out a personal loan and use the loan to pay off your existing credit card debt. At that time, you go from several credit card payments each month to a single payment on your balance transfer card or your personal loan. Spend all your extra money on this individual outstanding debt until it is fully paid – and if you find a balance transfer credit card with an initial zero interest rate, see if you can pay off your consolidated debt before the 0% introduction APR period ends, saving a solid chunk of interest rate change.
Once you have chosen a debt repayment plan or strategy, take the time to learn as much about it as possible. That way, you know how to use it to your advantage – and learn some tips and tricks that can make the repayment process even faster.
Want an example? Here is a useful tip for the avalanche method that Gonzalez shared with us: “If you choose to go with the avalanche method, I suggest you hit some small gains here and there when small balances are close to zero. If you pay down credit card A by an additional $ 250 per month but see credit card C at $ 250, you can get a quick profit that pays C next month.
Learn How To Have Fun With Less Money
No matter which debt repayment strategy you choose, you generally have two options when it comes to setting aside money for your debt payment: spend less or earn more.
If you want to reduce your credit card debt as quickly as possible, I do both. This can mean picking up a side feeling while cutting back on streaming media services – which, since your side feeling will probably eat into your movie viewing time, can prove to be a win-win.
That said, you do not want to feel that your life has been reduced to pennies and pennies. Make sure you take the time to have fun – and take the time to learn to have fun without going over your budget.
"Guilt does not have to be all doom and gloom," says Gonzalez. "Sit in and challenge yourself to new ways to have fun for less money." Whether you are registering your family for your local library's Summer Reading Challenge or deciding that this year's holiday will be a week – long stay with your grandparents, there are plenty of free or inexpensive ways to have fun this summer – and as we learned when talking to parents about their plans for the summer of 2021, after last year's quarantine advice and recommendations for on-site protection, many children will see the type of excursion as a treatment.
Do not forget to save and invest  When reducing credit card debt, do not forget the other important part of financial stability: save for the future.
Why is it important to save money and pay off debts at the same time? Why not put every extra penny against your debt and pay it off as soon as possible?
Look at it this way: If you spend all summer paying off your credit cards only to incur an emergency cost that you can not cover in cash, you may have no choice but to go back into debt. This is why financial experts often recommend prioritizing the emergency funds' savings over all other financial goals – even if it means taking a little longer to pay off their debts.
If you want to pay off your debt while building an emergency fund, come up with some simple financial rules to help you decide which dollars to go with. You can split your extra money 50/50, or you can tell yourself that the money you earn from your side position goes to your emergency fund and the money you save by reducing costs goes to repaying the debt. However, having a plan will make it more likely for you to achieve your goal – and even saving some money when you pay down your debt can help you avoid going into debt in the future.
Set – and Celebrate – Financial Milestones
There's one last step to keep in mind as you get closer to your debt repayment goals – and that's to celebrate every milestone when it happens. Did you use the Snowball method to successfully pay off your minimum debt? Turn up a song like “Money” (the one by Cardi B, or this one, your choice) and have a living room dance party with your partner. Did you successfully reduce your credit card debt by $ 1,000, $ 2,500 or $ 5,000? Take out the whole family for ice cream.
"If you have a lot of debt, I think it's hard to stay the course because it's going to be a long journey," explains Joe Saul-Sehy, creator and co-host. by Stacking Benjamins and author of the forthcoming STACKED: Your Super Serious Guide to Modern Money Management . Instead of just celebrating when you reach the bottom of the card payout, set milestones along the way. If you have $ 30,000 in debt (as a guest recently did in our show), set milestones every $ 2,500 you eliminate and celebrate in a small way to be grateful for the trip so far.
Saul-Sehy also suggests that you make sure you have many visual reminders of how much debt you have paid off so far. "I like to visually show my progress with a thermometer that is placed in a place that I can see." The most popular budgeting apps automatically create debt repayment tables for you, but there's something fun about taking a red Sharpie and coloring in another part of your repayment thermometer – or filling in another footprint on your path to a debt-free life.  Our Editorial Policy
Haven Life is a customer-centric life insurance agency supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.
Our Editorial Policy
Haven Life is a customer-centric life insurance agency that is supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.
Our content is created for educational purposes only. Haven Life does not support the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they suit your situation.
Haven Life does not have the right to provide tax, legal or investment advice. This material is not intended to provide and should not be relied upon for tax advice, legal advice or investment advice. Individuals are encouraged to seek advice from their own tax or legal counsel.