How To Pay Off $10k Of Debt In 18 Months

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While browsing through CNN Money yesterday, I was looking through their recommended articles and found an expert article about the fastest ways to pay off $10k of debt, published on The Lending Tree. The Lending Tree goes into depth on a two-step process for aggressively getting out of debt, and their method is specific and, according to the author, can help you make “real progress toward getting rid of your card debt.” TFD has discussed aggressive debt payoff many times before — from Lauren Bowling paying off $8k of debt in 90 days, to Alex Craig paying off $20k of debt the week before he got married. We have many contributors who have sunk into credit card debt and battled their way out. The Lending Tree’s article focuses primarily on credit card debt, which is what our experts generally recommend paying off first because of the high-interest rates that come with credit card debt.

The Lending Tree’s first step is to transfer your credit card balance so that you are eliminating the interest on your debt. According to the article, here’s how to use the debt-transfer method effectively:

“There’s a simple way to do this, and its brilliance is that it actually uses the banks’ marketing offers to your advantage: find a card offering a long ‘0% intro APR balance transfer’ promotional offer, and transfer your balance to it. These are cards which offer new customers a long period of time (often as much as 18 months) during which the card charges no interest on all balances transferred to it.”

At the end of the Lending Tree piece, they suggest credit cards that offer 0% APR, which you can check out here. I do not have any personal experience with credit card debt, nor am I an expert on the subject. However, when I interviewed finance professional Allison Eklund recently, she stressed that those of us signing up for new credit cards need to read the fine print and figure out if there’s a catch. I investigated a few of the 0% APR cards, and sure enough, the first one on the list offers 0% APR for the first 18 billing cycles, but then the ongoing APR makes a significant jump. I don’t think that means this method isn’t effective. In fact, I still think it is very valuable, it just proves that you need to exercise caution while transferring your balance, and be aware of the changing interest rates.

Essentially, there is likely to be a time limit on having an interest-free rate, if you choose to transfer your balance. The Lending Tree has already taken this into consideration: their second step in the two-step process is to “power through your balance during the 0% period.”

To better understand this method, I considered the example of transferring your debt to a card that offers 18 interest-free billing cycles. If every billing cycle is about a month, this means you’re signing on to pay off all of your debt in 18 months. In my opinion, the first question you have to ask yourself is: is that really possible? If the answer is “yes,” before you transfer your credit card balance, you’ll need to devise a strategy to get rid of your credit card debt in 18 months, thus taking advantage of the interest-free period without getting slammed with the impending high-interest rates.

If you have $10k of credit card debt, and 18 months to pay it off, this means you have to pay just over $555/month to completely get rid of the debt. While I would love to conclude by pointing to how ~easy and breezy that is, I realize what a huge undertaking it is to put about $560 toward a credit card every month for a year and a half. However, it is doable. You can cut down your expenses, find extra money in your budget, and pad your income with a side hustle.

The Lending Tree’s underlying argument in this article is that if you keep making large payments on your current credit card, your money isn’t going very far, because it’s paying off the interest instead of making headway on your debt. Their point is summed up when they point out the danger of interest rates: “just think of this: on a $10,000 balance, $150 of a $200 monthly payment would get vacuumed up by interest charges.”

If you’re considering this method, or have already transferred your debt to a new card and now have a limited amount of time to pay it off, here are a few TFD articles that can help you meet your goal:

How I Found An Extra $400 In My Monthly Budget

5 Expensive Bills I Lowered Just By Calling And Asking

12 Awesome Side Jobs For Making A Little Extra Money This Year

Exactly How You Can Save $10k This Year On A $40k Salary

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