How long will it take to pay off $2000 in credit card debt?

You can try it for yourself using the credit card payoff calculator below. So say you have a $2,000 balance on a card with no annual fee and an APR of 20%. If you can pay $100 a month, it might take you 25 months to pay off the debt. If the card has the same APR but an annual fee of $100, it might take 29 months.

How to pay off $25,000 in 1 year?

The snowball method simply means paying off your debts from smallest to largest dollar amount rather than by highest to lowest interest rates . Make the minimum payments each month on all of your debts, but attack your smallest one with a vengeance until it is gone! Then move onto the second smallest, and so on.

Is 20k in debt a lot?

High-interest credit card debt can devastate even the most thought-out financial plan. U.S. consumers carry $6,501 in credit card debt on average, according to Experian data, but if your balance is much higher—say, $20,000 or beyond—you may feel hopeless .

How long does it take to pay off $20,000?

It will take 47 months to pay off $20,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.

Should I pay off my credit card in full or leave a small balance?

It's a good idea to pay off your credit card balance in full whenever you're able . Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.

How to wipe credit card debt?

Outside of bankruptcy or debt settlement, there are really no other ways to completely wipe away credit card debt without paying. Making minimum payments and slowly chipping away at the balance is the norm for most people in debt, and that may be the best option in many situations.

Why is credit card debt so hard to pay off?

Most credit card interest is compounded daily, so every day you owe money after the due date, the interest climbs . It's easy to see how compounding interest can add up. Interest compounds even if you make the minimum payments.

What is an unhealthy amount of debt?

Key takeaways Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.

How much debt is serious?

Most lenders say a DTI of 36% is acceptable, but they want to lend you money, so they're willing to cut some slack. Many financial advisors say a DTI higher than 35% means you have too much debt. Others stretch the boundaries up to the 49% mark.

How do you clear debt you can't afford?

You can apply for your own bankruptcy or a creditor can make you bankrupt. Your financial affairs will be dealt with by the official receiver. Valuable assets are usually sold to raise money to pay your creditors. At the end of your bankruptcy most debts are written off.

What is the fastest way to get out of big debt?

Debt reduction strategies like debt consolidation, debt settlement and credit card balance transfers don't actually help you get out of debt. Making a budget, increasing your income, and lowering your expenses are some ways you can get out of debt faster.

How I Paid off $22,000 of Credit Card Debt (2024)

This was originally posted on September 22, 2014.

It’s done! After 6 years of growing a debt monster, and 3 years of attackingit with payments, I can finally say that I have paid off all of my credit card debt.

Whew!

When I made that first swipe I don’t think I knew how much it would affect my life. Living with credit card debt that I could not afford cost me a lot of stress, worry, and unnecessary cash. Yes, it was expensive to be in debt. At one point I had a 24% interest rate on a credit card with a large balance.

I knew that I wanted to not only get rid of the debt, but set myself up for success in the future. I’ve seen friends eliminate debt and fall into the same habits and patterns that caused the debt in the first place. I knew that if I learned how to use credit wisely that it could become a friend and not a foe.

So with that in mind, here’s what I did to tackle $22,000 of credit card debt.

Setting the Debt Deadline

Firstly, I set a date. I decided that I wanted to pay everything off within three years. That made it easy to figure out how much I wanted to pay towards my debt with each check. I chose to go with a consumer credit counseling service. They negotiated lower interest rates with my creditors so I could pay the balances down immediately instead of wasting money on interest.

However, that meant that I had to close all of my credit cards and not open a new line of credit. Closing credit cards with a large balance can hurt your credit score.

My credit score was already shot so that really did not matter to me. Getting ridof debt mattered more.

But be honest with yourself. By cheating and using your cards while paying them off you are only hurting yourself.

Creating the Cash Budget

Secondly, I committed to using all cash. I knew that I was addicted to using credit and there was no point in trying to get out of debt while I was still using it. I had already gotten rid of all of my credit cards and I created a budget that would allow me to use only cash.

Needs vs Wants

During the first few months, I started to teach myself how to distinguish needs versus wants. I prevented myself from impulse shopping with a simple rule. If I wanted to purchase something that was not on my shopping list or was not a part of my intended trip, then I was not allowed to buy it.

Plain and simple.

I defined a need as something that would help me either budget better, save or invest better, or something that I would use each day for a purpose.

Toothbrush? ok.

Fancy 70 dollar electrical toothbrush? Not ok.

By curbing my impulse shopping and learning to use money for needs instead of just wants, I created better balance in my spending.

Building an Emergency Cushion

Finally, I was honest with myself. I didn’t try to live super frugal or put all of my extra cash towards my debt. I knew that if I simply stuck with my plan, I would have everything paid off on the date that I self-imposed.

I didn’t stress myself.

I still traveled, dined out with friends and put money towards investing and saving.

Yes. I still invested.

This was very important for me. As a person with a financial background, I understand the importance of compounding interest. I used time to my advantage.

Looking back at the returns of the last 3 years, it was the best decision I could have made.

I contributed to my employer sponsored 401k up to the match.
I opened an automated passive investing account.
I also saved an emergency savings fund so I could avoid going back down the credit hole when emergencies came up.

I know you can do it too! I think you find yourself lacking in motivation because you are allowing the debt to take over your fun. Don’t restrict yourself to the point where you hate budgeting.

Start with a small ‘fun budget’ and allow it to grow as you pay down debt.

Are you in the process of paying down debt? What tips would you share with others?

Choosing a Debt Management Plan to Help

Here’s how I used a debt management plan to conquer my debt.

One of the most important tools in my pay off debt plan was a service that helped me create a three year plan to pay off the debt.

I found the consumer credit counseling servicethrough a friend of mine. She had used the service to pay off her debt and she also improved her credit score in the process. I decided to check them out and I set up an in person meeting to discuss my debt and plan goals with a counselor.

The counselor also helped me create a budget and managed the details every step of the way.

The service I used subsequently merged into ClearPoint Credit Counseling Solutions and I completed my debt management plan with them. Here’s how I paid off $22,000 of credit card debt in three years and how you can do it too using a debt management plan.

1)Gather all of your records

The first step in starting a debt management plan involves gathering all of your records. You will need your latest credit card statements, which should include the address to send payments. You will also need to make sure that you include all of your creditors in your debt management plan. I was able to exclude my car loan, but all of my other creditors were included. I had to track down a few statements since some of my credit cards had fallen into collections. Once I had everything, I was ready to start my debt management program.

2) Talk to your creditors and your counselor

If you are getting debt collection calls, don’t be afraid to answer them. I simply answered each call and let the creditor know that I was working with a credit counseling service. I also made it a point to contact my counselor about any changes to payment addresses, or other changes. She kept up with everything and that made things really easy on me.

However, they did all of the negotiations for me, getting fee concessions, and negotiating most of my interest rates down to zero.

3) Create your budget

As you are paying off your debt, you may feel tempted to overspend or stop your payments to spend the money elsewhere.

Don’t do it!

Trust me, the three years will fly by quickly and you will be so happy to be debt free afterwards. Instead, create a budget along with your counselor to help you stay on track. I used the budget that they provided to help me get started and then as I learned what works best for me, I created my own budget with room for investing in my employer sponsored 401k plan. Doing this allowed me to take advantage of free employer match money and invest in the markets.

The process of paying off debt can be very difficult but with the help of a credit counseling service like ClearPoint, it can be much easier.

How about you? Have you used a debt management plan to pay off debt?

This is my personal experience with ClearPoint. ClearPoint is a trusted partner. Please see our disclaimer regarding trusted partners.