Ways to pay off your debt

5:52 AM, Sep 11, 2013   |    comments
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WASHINGTON (WUSA9) -- We did a good job paying down debt in the first half of the year. In the second half we didn't do as well.

CardHub.com is out with a report that shows the average household now owes about $6700 on their credit card bills.
That number is up from approximately $6600 in the first quarter.

This is pretty typical behavior. In the first half of the year, we have extra money laying around, from year-end bonuses or tax refunds. This time of year, that money is all gone, so we start wracking up new debt.

But there are a couple of strategies that can help dig ourselves out of the credit card hole.

There's the "Island Approach." What you do is use different cards for different types of transactions, like a chain of different islands. You could transfer existing debt to a 0% credit card to reduce your monthly payments.

Ongoing spending -- that you pay down every months can go on a rewards card.

Another option is the Snowball Method. This is a triage strategy. You make your biggest payments to the card with the highest interest rate, say the 24 percent card. You then make the minimum payment required on the rest. Once your most expensive debt is paid off, you move on to the second highest interest rate card and so on.

If you need a push to finally get down to the business of paying off that debt, then think about it this way: Let's say you have a little money left over in your savings account beyond what you need for your rainy day fund. Pay down that credit card debt with an 18% interest rate. You are getting a guaranteed 18% return on your investment. Nothing else you can possibly do with that extra money sitting around will give you an 18% return with zero risk.

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