A disadvantage of credit use is losing future financial flexibility. Credit cards can reduce your future buying power if you carry a balance and let charges build up.

Loan balances that never seem to go down, a sense of dread when your bills arrive, is there a way to change this cycle? Yes, with a plan and determination, you can make a difference in a relatively short time.

Illinois Extension resources can help you explore different strategies and be informed of choices you may not have realized were available. You can pay down your debt and then have more money for your other financial goals.

Using credit is an important responsibility.

A good credit history can help you get a job, make major purchases, and accomplish many short and long-term goals. A poor credit history can make it harder for you to rent an apartment, buy a car, or fulfill a dream. It is important to know how credit can change your spending power as well as know how you can recognize the danger signs of credit misuse.

A disadvantage of credit use is losing future financial flexibility. For example, if your credit card debts take 10 percent of your take-home income, you can’t spend those dollars for something else. Credit cards can reduce your future buying power if you carry a balance and let charges build up.

How can you get rid of your debt? The first step is to gather all your credit card and other debt bills together. For each account, write down the total balance and the minimum monthly payment required.

The next step is to be sure you can make the minimum payments on your bills. Remember, credit card companies and other lenders often require a minimum payment each month. However, if you pay only the required minimum payment, it can take a very long time to clear your balance.

For example, if you have a $2,500 balance at 21 percent interest and you pay 2 percent of the remaining balance each month (a typical minimum payment), it will take you more than 63 years to pay off your debt. In addition, it would cost you $14,699 in interest charges (calculated at www.PowerPay.org, from Utah State University Extension). Plan to do more than just pay the minimum whenever you can.

Choose strategies to cut your debts.

• Pay high-interest-rate cards first. Debt with higher interest rates leads to more interest adding up over time.
• Pay off debt with the smallest balances first. It can be very satisfying to pay off small debts quickly and then focus on the larger debts. Once the small balances are paid, use the extra money now available to pay on the bigger balances.
• Stop charging more purchases. If needed cut up your cards, hide them, or freeze them in a baggie of water. Give yourself time to think about the purchase.
• Stay flexible. The key to sticking to your credit card debt repayment plan is to stay flexible. If you find that you set unrealistic spending limits in the beginning, revise your

spending plan the next month.

Resources to help

• This chart can help you organize your debt (https://extension.illinois.edu/sites/default/files/2021_organize_debt.pdf.
• Read our tip sheet about which bills you should pay first. (https://extension.illinois.edu/sites/default/files/which_bill_to_pay_first.pdf)