5 Dave Ramsey tips to pay off your credit card faster

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Dave Ramsey’s advice could help you get out of debt as soon as possible.


Key points

  • Dave Ramsey provided some tips for paying off credit cards quickly.
  • He recommends creating a budget that prioritizes paying off your debt.
  • Ramsey also suggests using an approach called the debt snowball method.

Paying off credit card debt can be a major challenge, but it’s worth the effort to try to get it done as quickly as possible. This has always been the case due to the high interest rate associated with credit cards, but it has become even more important this year as rates have risen.

The good news is that there are some techniques you can implement to pay off your cards faster. Financial expert Dave Ramsey has several suggestions on how to accomplish this. Here are some of his top tips.

1. Live on a budget that prioritizes paying down debt

Ramsey believes the key first step to paying off debt is to make a budget so you can plan what you will do with your money. He suggested starting by listing your income and expenses, then putting the remaining money after accounting for expenses to pay more on your credit cards.

This is good advice because by planning where your money is going, you can use it more wisely – and by budgeting for additional credit card payments, you’ll be better able to pay off the principal balance so that your repayment debt is cheaper. overtime.

2. Prioritize emergency savings

Ramsey thinks that before you start making extra credit card payments, you should save up a $1,000 emergency fund as soon as possible. He describes this as a “starter” emergency fund that will allow you to stop borrowing in an emergency.

Although this may seem counter-intuitive, it’s actually great advice. It can be daunting to put extra money on credit cards, see your balance go down, and then have to reload your cards again when unexpected costs rise. If you have an emergency start-up fund, you won’t have to worry about that.

3. Stop going deeper into debt

One of Ramsey’s top suggestions for paying off credit card debt is to stop using your credit cards altogether. He suggests you “break up with them and never look back” because if you “stop using credit cards and finally pay them off, you’ll never have to worry about your card balance again.” credit. Never again.”

While most of Ramsey’s advice is great, the reality is that you can use credit cards responsibly, so you don’t necessarily have to swear them off for good. If you set a budget and pay off your balance in full each month, using credit cards allows you to boost your credit and earn rewards without the inconvenience.

4. Look for ways to reduce bills and expenses

Ramsey also suggests cutting other costs so you can send extra money to your creditors. He advises using two different approaches to achieve this: ditch certain expenses altogether by removing certain expenses from your budget, and take steps to lower bills by being mindful of your spending. Cutting bills, for example, could be done by buying generics, making a meal plan, or reducing the electricity you use.

5. Adopt the snowball debt repayment method

Finally, Ramsey advises using the “debt snowball method”, which is a winning approach for which he is famous. With this approach, you first pay extra on your card with the smallest balance, then move on to your next largest debt, then your next largest debt until all of your debt is gone.

The advantage of this approach, according to Ramsey, is “motivation and momentum”. But the downside is that you could end up holding on to higher-rate debt longer if you don’t prioritize repayment based on the loans that have the highest rate.

Ultimately, you’ll have to decide if you can stay motivated even if you prioritize your most expensive debts first. If you can, do it while following Ramsey’s other tips for budgeting and lowering your bills and you should be well on your way to becoming debt free.

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