The Best Way to Get Out of Store Credit Debt
- 1). Examine your most recent store credit card statements. List on a separate piece of paper the store where you hold the account and underneath it the total owed, the minimum monthly payment and the interest rate or APR, all of which can appear on the statement. Do this for each account if you have multiple accounts.
- 2). Draft a monthly budget, or review it if you already have one, to determine what expenses you can be reduce or cut out altogether until your debt is paid off. Look first at non-essential expenses like dining out, entertainment and clothing allowances, followed by areas where you can reduce spending such as the grocery allowance or savings. Tally the total amount of money freed up to go towards your debt. Add your current budgeted store credit payments and the money freed up for the new total amount you will use to pay your store credit debt.
- 3). List your debts in order of total owed from least to greatest or in order of highest to lowest interest rate. Choosing to list your debts from the least to greatest gives you a psychological advantage, according to Dave Ramsey. By eliminating the smallest debt, you earn quick positive reinforcement to eliminate all of your debt. By choosing to list your debt from highest to lowest interest rate, you are getting out of debt a bit faster and eliminating paying extra accrued interest. Write down the minimum payment next to each debt from the second listed on down. Then decide which method suits you best.
- 4). Calculate how much you can put toward paying off the first debt in your list. To do this, find the final sum you came up with in Step 2 and subtract the minimum payments for the second-to-last debt listed in step 3. Put at least that amount, monthly, toward paying off that debt. Once debt number one is paid in full, add debt number two's minimum payment with debt number one's former payment for the new monthly payment toward debt number two. Repeat the process for each listed debt until all your store credit debt is paid in full.
Source...