How to Pay Off My Credit in One Year

Paying off all your credit accounts in one year could provide you with added financial security. You could find yourself with more money to invest in retirement savings. Or you could increase the amount of money in your emergency savings fund. Paying off the credit accounts will require discipline and possibly sacrifice as you cut expenses and nonessential spending. It will be important to create a sound and reasonable plan for your debt reduction.

Instructions

1

Review your budget. Cut discretionary expenses such as premium cable television channels, lawn service and dining out. Spend a month making notes about every dollar that you spend. Then review the list to see what nonessential items or services you could have done without -- or obtained at a lower cost.

2

Create a new budget based on your review. Determine how much you will be able to spend each month on paying off your credit. Also consider money you have in discretionary savings accounts -- but don't raid your 401K or other retirement accounts and don't dip into your emergency fund.

3

Find ways to supplement your income for a year. Take a job waiting tables at a restaurant on weekends or take a job as a sales clerk at a department store. Also hold garage sales or sell a used car that you are no longer driving. Plan on using all of the extra money on paying down debt.

4

Make a list of all your credit accounts. Rank them by interest rate, with the accounts with the highest interest rates listed at the top. These accounts are costing you the most money in finance charges and should be paid off first.

5

Pay off your credit accounts, one at a time. Make lump sum payments, if possible, or make biweekly payments to save on finance charges.Your ability to pay all your credit accounts off in one year will be determined by how much you can pay each month and how much debt you have. Keep paying on the debts over the course of the year until they are paid off.