Living on a Budget, Saving Money/Credit Card Repayments

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Question
Hello, I have a few thousand on my credit card and have been paying off small amounts (over the minimum asking amount) and hoped to clear this within 2 years. I have one more year to go on clearing the balance. Do you think I should continue paying the small amounts each month or should I reduce the amount (still paying the minimum amount on the card) whilst saving up over a period of time and then pay the balance off in one full amount. What do you think would look better on my bank balance for future creditors?
Would appreciate your comments. If I was to pay the balance off in full by saving it would take me about 5 months.

Answer
Sam,
 I think the best way to approach it is to list all of the balances, smallest to largest.  Pay the minimums on all but the smallest and throw everything you have at the smallest one.  After you finish off the smallest go to the next smallest throw everything you can at it, while paying the minimums on the larger ones, until it is finished then on to the next until  you are finished with all of them.  The credit score likes a ratio of debt to credit and a steady history of paying.  They want to keep you in debt at the right proportion and they reward you with a higher score.

   The method of paying them off the way I told you is the debt snowball.  It helps you build up "financial muscle" and momentum.  When you finish, use the money you were using for debt to build up an emergency fund of 3-6 months.  If you do not have a mini emergency fund now, 1000.00, do it before starting on the credit card debts.  

Living on a Budget, Saving Money

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Tim West

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Budgeting, credit, collections, basic insurance and investing. Small business budgeting basic will and estate planning.

Experience

Financial coach since 2009. Help coach people in personal and small business financces.

Education/Credentials
Head of financial ministries at Grace Fellowship of Augusta,Dave Ramsey Certified financial counselor and 20 years of doing it my self.

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