Ask Ash Cash: What Can You Do To Reduce Credit Card Debt?

AllHipHop Staff’s resident Daily Word guru and all-around inspirational guy, Ash Cash, is back with his latest installment of “Ask Ash Cash.”

Watch the video below his response, as he offers more sound advice to readers:

Hello Again!! Today's installment of Ask Ash Cash comes from Nicole....

Dear Ash Cash: What can I do to reduce credit card debt?

There is a myth going around that says you should pay off the debt that has the highest interest rate first in order to get out of debt quickly. While that isn't completely a lie, the truth is that you
should pay off the smallest debt first in order to gain momentum in your debt repayment program.

As I discuss in my book, Mind Right, Money Right: 10 Laws of Financial Freedom, it is imperative that you get your mind right in order to get your finances together. I believe that by paying off your smallest debts first, you gain some quick wins in order to stay excited about getting out of debt completely. This method is called "snowballing," which means that you stop paying
everything except minimum payments and focus on one thing at a time.

Here's an example of how it works from Wikipedia:

(This example does not add in the accruing monthly interest of the credit cards and loans, which make the balance amounts higher and payoff time longer.)

A person has the following amounts of debt and additional funds available to pay debt (the debt is listed with the smallest balance first, as recommended by the method):

Credit Card A - $250 balance - $25/month minimum
Credit Card B - $500 balance - $26/month minimum
Car Payment - $2500 balance - $150/month minimum
Loan - $5000 balance - $200/month minimum

The person has an additional $100/month which can be devoted to repayment of debt.

Under the debt-snowball method, payments for the first two months would be made to debtors as follows:

Credit Card A - $125 ($25/month minimum + $100 additional available)
Credit Card B - $26/month minimum
Car Payment - $150/month minimum
Loan - $200/month minimum

After two months (presuming the person has not added to the balances, which would defeat the purpose of debt reduction), Credit Card A would have been paid in full, and the remaining balances as follows:

Credit Card B - $448
Car Payment - $2200
Loan - $4600

The person would then take the $125 previously used to pay off Credit Card A and apply it as additional payment to the Credit Card B balance, which would make payments for the next three months as follows:

Credit Card B - $151 ($26/month minimum + $125 additional available)
Car Payment - $150/month minimum
Loan - $200/month minimum

After three months, Credit Card B would be paid in full (the final payment would be $146), and the remaining balances would be as follows:

Car Payment - $1750
Loan - $4000

The person would then take the $151 previously used to pay off Credit Card B, and apply it as additional payment to the car loan balance, which would make payments as follows:

Car Payment - $301 ($150/month minimum + $151 additional available)
Loan - $200/month minimum

It would take six months to pay the car loan (the final payment being $240), whereupon the person would then make payments of $501/month toward the loan (which would have a $2800 balance) for six months (with the last payment at $234).

Thus, in 17 months, the person has repaid four loans, with two of them being paid in a mere five months and three within one year.

Again, paying down your debt this way will give you some psychological advantages and will keep you motivated to keep going!!! Mind Right, Money Right!!! That's the only way!!

Ash’Cash is a Business Consultant, Motivational Speaker, Financial Expert and the author of Mind Right, Money Right: 10 Laws of Financial Freedom. For more information, please visit his website,