Add up all of your current balance amounts and write down the total amount (and don’t worry, it will get easier from this point on) 

Add up all of your minimum payment amounts.

Write the amount of money that you can afford to spend on credit card payments each month.

 

Now, take a look at the table you just completed.  While it might seem like an overwhelming amount of debt, often, just making it a real number instead of an imaginary “huge” number makes the amount seem easier to deal with. 

For instance, if you owe $17,000 on your credit cards, it is much easier to deal with the finite amount of $17,000 than it is to feel overwhelmed and that you might never pay it off.  With the limited amount of $17,000, you can make a plan and know what it will take to really pay that amount down and when it will be possible.

Next, take a look at the total minimum payments that you must pay each month.  This is the bare minimum.  You cannot pay less than this unless you want to default on your credit card.  Regardless of which order to you decide to pay off your debt, make sure that you are always making the minimum payments on your credit cards so that you don’t get yourself into more trouble.

The last line on the worksheet is the amount that you can afford to pay each month towards credit cards.  Often, the first time you fill out the worksheet, this amount will be less than the amount you will finally settle on. 

Let’s imaging that all of your minimum payments add up to $453.12 each month and that you are able to afford to pay $600 each month towards reducing your credit card debt. 

In this case, you would pay the $453.12 towards your minimum payments and the remaining money (the $146.88) would get applied towards one of your credit cards to reduce the total amount owed.