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When your credit cards are maxed out and the interest for those accounts is high, the stress can be almost debilitating. It feels like you’ll never get out from under, especially if you’re over 40 and you’re only paying the minimum balances. Those minimum balances barely cover your interest payment. So little of your actual balance is paid off every month it can start to feel like you’ll die of old age before it’s ever back to zero! But we have a plan to help you pay off credit card debt fast when you are over 40.
But there’s no reason anyone should have to live like that. If you can come up with a plan, one that you can stick to, you CAN pay off your credit card debt. And you can do it much faster than you think you can.
There are a few tricks and strategies to help you get out from under that mountain of debt and start gaining control of your finances.
Read Related Article: Monthly Bill Tracker – See These 5 Tools
Wouldn’t that feel so much better than the situation you’re in now?
If you’re thinking – “ugh, I’m over 40 and it will take me the rest of my life to pay off my debt” you’d be wrong. If I could pay off credit card debt fast when I was over 40 I feel confident you can too. Want to read my story? Go here and learn what I did!
Table of Contents
STRATEGIES TO HELP YOU PAY OFF CREDIT CARD DEBT FAST WHEN YOU ARE OVER 40
WHAT CREDIT CARD DEBT SHOULD YOU PAY OFF FIRST
First things first, you need to figure out which debt to pay off first. It can make a big difference in how much interest you pay and how long it takes you to pay if off. Sometimes the simple answer that some financial guru’s like Dave Ramsey gives you might not always be the best for you. It just depends on a few factors.
When it comes to determining which debt to pay first, there are a few things to consider:
KNOW WHAT KIND OF DEBT YOU HAVE
You may think that any and all debt is bad, but that’s not the case. Some debt is actually good. For instance, student loans and a mortgage can be considered good debt as long as you’re paying them on time and making at least the minimum payment every month. Not only can they boost your credit score, but some of this debt is tax-deductible.
These debts don’t need to make it to your “pay off fast” list first. These can be reserved for after you’ve paid off all consumer debt.
Plus if you’re a teacher, nurse, policeman or fall into one of the other categories of service providers you can actually have some of your student loan debt forgiven after 10 year of service. For a complete list of loans that qualify for student loan forgiveness, check out the article by Student Loan Hero here.
Credit card debt usually falls into the bad debt category though. Especially if your most or all of your accounts are maxed out.
Your credit score is partially determined by using a ratio of the amount of credit you have available against the amount you’re currently using. If your credit card balances are low and paid off almost every month, this can be good debt. But if you’re reading this article, that’s probably not your situation. That means your credit card balances are hurting your credit score.
If you haven’t checked your credit score in a while, you’ll want to read all about why checking it regularly can be a real benefit to you.
DETERMINE WHAT IS GOING TO BE MOST BENEFICIAL
Paying off your credit card balances with the highest interest rate will save you money in interest; money that can be put towards other debt. Paying $1000 towards a loan with an 18% interest rate will benefit you much better in the long-run than paying that same $1000 towards a loan with a 7% interest rate.
However, this is not always the case. If your lower interest credit cards have a smaller balance, an amount that can be completely paid off within 3-4 months, you may find more satisfaction in paying those off first so you can mark them off your list. It may also help to keep you motivated towards your bigger goals.
When deciding which debt to pay off first, take a look at your own situation and decide what works best for you. Pay off higher interest rate cards to save money in the long-run or pay cards with the lowest balance to get them off your list and free that money up for other debts.
We have a FREE Resource Library available to readers of A Mess Free Life and in there are lots of resources to help you manage your debt and credit score. Don’t have the code? Sign up below!
THINK ABOUT YOUR CREDIT SCORE
The last factor in determining what to pay off first is your credit score. If you’re considering a large purchase soon, like a new home or car, and need a good credit score to get a loan with a low-interest rate, you’ll want to focus on what will improve your credit score the most.
Improving your debt ratio will improve your credit score AND help you get a lower interest rate on new loans. It may even help you to negotiate lower interest rates on your current credit card accounts.
Remember, your debt ratio is the amount of credit you have compared to the amount of credit available to use. If you have a credit card with a $10,000 limit, you want to make sure your balance is no more than $3,000 for an acceptable debt ratio.
If you have several credit cards that are maxed out, paying each of them down at the same time can improve your credit score more than paying off just one.
The best way to decide what to pay off first is to take a look at all of your debt; make a spreadsheet that includes each debt, the amount you owe, and what your interest rate is.
Seeing the big picture of your debt will help you get a handle on it. Then determine what your goals are. Paying off your debt so that you can debt-free will have a different path than paying off debt to improve your credit score.
Now that you’ve thought about what to pay off, let’s take a look at how to pay it off:
PAY OFF CREDIT CARD DEBT FAST
In order to pay your debt off fast, you need both a plan for what you’ll pay first and you need a budget to keep track of your expenses so that you know how much you can afford to pay each month.
Once you have those things together, here’s how to go about paying off your credit card debt fast:
FOCUS ON ONE AT A TIME
If your goal is just to get your debt paid off fast and you’re not worried about a quick boost to your credit score, your best option is to pay one at a time.
There are two options for this method:
- Pay the one with the highest interest rate first to save money in the long-run and allow you more money for debt reduction.
- Pay the one with the lowest balance first so that you can see immediate progress and stay motivated.
- Shift Your Budget
It’s time to start making cuts in your budget and reducing your expenses so that you have more to put towards debt reduction.
Look at cutting cable and replacing it with a streaming service. My friend Kim from Thrifty Little Mom wrote a great post about how to do it. You can read that article here.
Reduce your cell phone bill by canceling your plan and getting a pay-as-you-go plan.
Create a monthly meal plan that includes budget meals then shop only for what you need. You can read all about why this is the best method for creating meal plans and controlling your grocery budget and learn the secrets of saving money on food.
Cancel your gym membership and workout at home.
Cancel your weekly dinner & a movie night and go out for a less expensive date night.
There are so many options; find the ones that work the best for you. Or check out my list of ways to cut expenses.
PAY MORE THAN THE MINIMUM DUE
Now that you have more money to put towards your debt, use it wisely. Every dollar you pay over the minimum monthly payment goes directly to your principal balance. Paying an extra $50 a month will reduce your balance by $100 in two short months. And a lower balance equates to less in interest payments.
CONSIDER DEBT CONSOLIDATION
Consolidating your debt can immediately lower your overall payments to one account with a lower interest rate so that you can pay down your debt faster without increasing your payments. This is different than debt settlement. For all the reasons you should avoid debt settlement – go here and learn why this is NOT something you want to do.
There are three ways to do this:
- Transfer all of your balances to one credit card. Of course, you need to have credit available on that card to do this, but it will zero out your other accounts. Just make sure that your transferring to a card that has a lower interest rate.
- Apply for a debt consolidation loan from a bank. This would be a personal loan and would most likely have a lower interest rate. When you are approved and receive your money, you can immediately pay off all of your credit card balances and just make loan payments that are less than the combined payments of your card balances.
- If you have equity in your home, you can also get a home equity loan. Your mortgage company will allow you to use your home’s current equity. This will either increase your current mortgage payment or add a second mortgage payment, depending on what your loan company decides to do. Keep in mind though that you’ll be using your home as collateral and you run the risk of losing your home if you don’t pay the money back on time. Although an option NOT one that I personally recommend.
Paying off credit card debt doesn’t have to take the rest of your life. It can be done quickly if you have a plan.
And if you need help creating that plan and sticking to it, Undebt.it can help.
With Undebt.it, you can create a payoff plan that works for you, get support, track your payments, and project how long it will take to get out of debt.
Most of their services are free, but their premium plan also allows you to manage all of your monthly bills (not just your debt), helps you save with a savings challenge, use their debt blaster to help you pay off faster, and so much more. All for just $12 a year!
CONCLUSION
There are many things to consider when you start to fully embrace getting out of debt and paying off consumer credit. It’s not impossible to pay off your debt over 40. I did it at that age and I know you can too! Some options may not be the best choice for you given your particular set of circumstances. But having a plan is the first step, so it’s time to stop wishing your debt away and do something about it. Create a plan, then sign up for Undebt.it to make it a reality. Use their free tools to get started and see if it doesn’t make a difference in your ability to pay off debt fast.
