4 Numbers You Should Know to Pay Off Your Credit Card Debts

Updated: March 7, 2024

How do you pay off your credit card debts? Most people just pay it whenever the bill comes with whatever amount they can afford.

More often than not, this strategy fails at lowering your debts because the amount you pay each time is just enough to cover the interests you incurred.

In worse cases, especially when you have several credit cards, you don’t have money left anymore to pay even the minimum amount due when you receive the billing statement.

If you want to pay off your credit card debts, you need a payment strategy. One that is simple enough to follow, but ensures good progress each month towards eventually wiping it all out.

Fortunately, I’ve discovered an effective strategy, which I’m sharing below. Moreover, the process all starts in knowing four important numbers.

1. Your current total debt

How much debt do you EXACTLY have? How much is your “Total Amount Due” in your last billing statement?

I’m honestly not surprised anymore when I ask someone this question and all they can give me is a rough estimate. Needless to say, you should know how much you really owe because you can’t hit a target you can’t see.

2. The minimum amount you need to pay each month

Check your latest credit card billing statement and get the “Minimum Amount Due” written that’s written there. If you have multiple cards, then add and get the total from each bill.

This number also represents your minimum TARGET SAVINGS for the month. We’ll talk more about this number later.

3. Your monthly net income

After removing taxes and other deductions, how much money do you EXACTLY get to take home? A lot of people only know their gross monthly salary, but not their monthly net income.

And frequently, this is the reason why people got into a lot of debts in the first place. They spent more than what they were earning because they spend based on what they assumed they were earning.

4. Your monthly necessary expenses

How much money do you NEED each month to survive?

This is your no-frills budget that only covers necessities such as food, water, rent, transportation, and other non-negotiable expenses.

Using all these numbers to pay off your debts

Now that you have these five numbers, what do you do next? I know you already have an idea. But let me tell you in better detail.

First, subtract your necessary expenses (4) from your net income (3) to get your ideal monthly savings. If you get a negative number, then you should find ways to further minimize your expenses AND try to earn extra income.

Second, compare the current month’s total minimum amount due (2) with your ideal monthly savings. Your latter should be higher. If not, then again… find ways to cut your monthly costs AND look for opportunities to make more money.

Third, whenever you receive your salary, immediately set aside the minimum amount due (2) PLUS an extra amount.

For example, if the total minimum amount you need to pay is P3,000 — then set aside P4,000 immediately when you get your paycheck. If you receive salary twice a month, then set aside half of that amount for each time.

The higher that extra amount that you set, the faster you’ll get out of debt. But don’t use all your monthly savings, it’s good to allocate a portion of it towards building an emergency fund. This way, you’ll have some money saved for unforeseen expenses and avoid incurring more debts.

When your credit card bill comes, pay the minimum amount due PLUS the extra amount. If you have several cards, then choose the one with the lowest balance to put your extra amount to, and just pay the minimum amount each month for the rest of the cards.

Write your total debt (1) on a piece of paper and post it somewhere that you see every day. This will serve as your daily reminder that you’re currently working on an important financial goal.

More importantly, update the number each month. This will help you stay motivated because you can watch how your debts are slowly BUT SURELY going down with each month that passes.

Lastly, just repeat the cycle until you are able to pay off all your debts.

Continue learning:

What you just read is a simplified version of the Debt Snowball Method. If you want to learn how this very effective debt payment strategy works, then read these articles:

What to do next: Click here to start your financial journey with IMG Wealth Academy


  1. Always a pleasure to read methods to get rid of that pesky thing called debt, and yes I have read the complete article on the snowball method. Whenever we encounter someone with a debt problem, it is wonderful to be able to point them these helpful articles. One of my life mottos is: ” DEBT FREE IS THE WAY TO BE.”

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