As easy as it is to spend money on a credit card with a tap, swipe, or click, it’s just as easy to quickly rack up debt on credit cards. Regardless of how you got there, here’s how we recommend you get in control of your credit card debt.

Check out the training video at the bottom for more info on this topic.

Say Goodbye to the Credit Card

If you can, stop using credit cards with high balances to make new purchases. Remove it from your online shopping profiles, cut the card in half and throw it in the trash. This is the single most powerful step you can take toward paying off high credit card balances without accumulating new debt.

Payment Transaction Category Workflows

  1. Categorize each debit (negative amount) transaction associated with money leaving your checking account for the recommend debt payoff amount as “Debt Payoff.” 
  2. Categorize each credit (positive amount) transaction associated with money entering the credit card account for the recommend debt payoff amount as “Debt Payoff Received”

Example if you're no longer using the card: 

I have an Amazon Prime Visa credit card with a balance of $4000. I want to pay off this debt. The Tiller Debt Progress sheet recommends I pay $400 a month on this card. 

I am no longer using this credit card. 

I schedule one for $400 to pay down the $4000 balance that will clear before the end of the month.

I see two transactions associated with this payments in my Transactions sheet. I categorize the -$400 for the money leaving my checking account toward my high balance payoff as “Debt Payoff” and the $400 entering the credit card account toward my high balance payoff as “Debt Payoff Received.” 

I see the Debt Progress sheet update with my debt payoff progress for the month for that account. 

Still Using the Credit Card

If you can’t commit to not using the credit card here are our recommendations and suggested workflows for paying down high credit card balances.

Recommendations:

  1. Pay the new balance for recent purchases in full before the end of your current budget period. We recommend paying before the end of your current budget period because it makes accounting for the spent money easier and results in a more straightforward category workflow. At the very least, pay the new balance by the due date to prevent accumulating new debt.
  2. Categorize new purchases on the credit card using normal budgeted expense categories as they appear on the Transactions sheet when spending happens like groceries, gas, etc.
  3. Make two separate payments. One for the new balance for recent purchases made in the current statement period and a second one that’s the recommended payment amount for paying down the debt. 

Payment Transaction Category Workflows

  1. Categorize each debit (negative amount) transaction associated with money leaving your checking account to cover recent purchases as “Transfer.”
  2. Categorize each credit (positive amount) transaction associated with money entering the credit card account to cover recent purchases as “Transfer.”
  3. Categorize each debit (negative amount) transaction associated with money leaving your checking account for the recommend debt payoff amount as “Debt Payoff.” 
  4. Categorize each credit (positive amount) transaction associated with money entering the credit card account for the recommend debt payoff amount as “Debt Payoff Received"

Here’s an example where I’m still using my credit card:

I have an Amazon Prime Visa credit card with a balance of $4000. I want to pay off this debt. The Tiller Debt Progress sheet recommends I pay $400 a month on this card. 

I’m still using the card for gas and groceries because I want the rewards points. I spend $200 on the card in this budget period. $150 is categorized as groceries and $50 is categorized as gas. 

I schedule two payments that will clear before the end of the month. One payment is for $400 to pay down the existing high balance. The second payment is for $200 to pay off the recent groceries and gas purchases. 

I see four transactions associated with these payments in my Transactions sheet. I categorize the -$200 for the money leaving my checking account to cover recent charges as “Transfer.” I categorize the $200 for the money entering the credit card account to cover recent charges as “Transfer.” I categorize the -$400 for the money leaving my checking account toward my high balance payoff as “Debt Payoff” and the $400 entering the credit card account toward my high balance payoff as “Debt Payoff Received.” 

My transfers balance out and I see the Debt Payoff budget actuals update on the Budget sheet and see the Debt Progress sheet update with my debt payoff progress for the month for that account. 

Tracking Debt Payoff on Manually Added Credit Card Accounts

If you're using the Debt Progress sheet to track your debt payoff progress for credit cards you weren't able to connect to the Tiller Console to get an automated data feed you'll want to update the account balance on the Accounts sheet for the manually tracked credit card account (use the balance on your statement after the payment has cleared) and enter any transactions associated with payments manually. 

Video Training

Read what's next: Weekly Debt Payoff Progress Workflows

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