Every month, the credit card bill lands in your mailbox or inbox. And every month, you’re diligent about paying it. Yet every month, it doesn’t seem to go down the way it should, and you feel like you’re only prolonging the amount of time you’re going to be behind the credit card debt eight ball.
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For decades, Suze Orman has been advising people who feel just like you do. The bestselling author and renowned financial expert understands how easy it is to feel crushed by your debt. Fortunately, she also understands that, if you follow a few simple steps, it’s possible to start crushing your debt in return.
Don’t Get Overwhelmed
Shame and anxiety aren’t exactly the best motivators. Orman doesn’t want you to succumb to either of these emotions — they won’t spur you to take action, unless you count burying your head in the sand (which she doesn’t). Resigning yourself to thinking that your situation is hopeless can only turn those thoughts into reality. Orman wants you to get up, dust yourself off and make a plan.
“You have the power within you to take more control of the situation. But that requires kicking shame and blame out the door. They aren’t going to help you,” she said. “When did beating yourself up ever help? C’mon, let’s decide right here and now that this month you will take one step to better manage your credit card debt.”
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Pay a Fixed Amount Every Month, Not the Bare Minimum
One easy step to start taking this month can save you a lot of time and money in the long term. If you’ve been in the habit of paying the minimum amount due on your credit cards every month, then you know that this amount will decrease over time. But, as Orman explained on an episode of her show, not soon enough.
“If you only pay the minimum payment due, chances are you are not going to be out of credit card debt for a really long time,” she said.
To further prove her point, she offered a hypothetical: Let’s say you have three credit cards that totaled $5,000 in debt and you’re paying 21% interest. At the start, your minimum payment is $150 each month, but this goes down as you pay it down. All good, right? Well, no.
Orman broke down the math: If you only covered your minimum monthly payments as they went down, it would take you 19 1/2 years to pay off your debt. As if knowing that a whole human being could be born and reach voting age in the time it would take you to be debt-free weren’t bad enough, you might want to sit down before looking at what you’d pay in interest: $6,500. That’s right, more in interest than the original amount you owned.
Orman wants you to set aside a fixed amount of money that reflects the original minimum payment you were asked to pay — in this case, $150 a month. It may not seem like a lot, but this approach shaves down 15 years of payments, enabling you to pay down your debt in just 4 1/4 years. Even better? You’d only be on the hook for $2,569 in interest. That’s a $4,000 difference.
It’s a pretty easy debt repayment plan, but it only really works if you do one additional thing: Don’t spend on those cards while you’re paying them down.
Ask To Lower Your Interest Rates
Nothing ventured, nothing gained applies to a lot of things in life, including calling your credit card issuer and asking if they can lower your interest rate, even by a few percentage points. The smallest changes can make the biggest difference — and Orman said you’d be surprised by how often this approach can work.
Just be calm and kind when you make your request. “Besides, it costs you nothing but a few minutes on hold to make the request,” Orman said.
Paying off your credit card debt doesn’t have to be Sisyphean task for the rest of your life if you master Orman’s suggestion of paying a set amount every month, regardless of how low your minimum payments go. Don’t succumb to any shame or fear around being in debt. And who knows, if you give your credit card company a call, they might be willing to lower your rates.
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This article originally appeared on GOBankingRates.com: Suze Orman: 3 Tips To Crush Your Credit Card Debt
