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How Can I Figure Out How Much I Can Afford to Pay My Credit Cards Each Month? – George

“Hi Steve,

I have one credit card with a $20,000 balance with a $450 minimum monthly payment. I’m not getting too far at paying this off. I would like to start paying higher payments to pay this off faster but im not sure how to figure out how much is the most I can afford to pay each month so I can still pay all my bills and not run out of money and write any bad checks.

Is there some kind of formula or spreadsheet to figure out whether i can afford to pay $600 or $700, or more? Is there a way to figure out what my max monthly payment is?

Thank you very much!



Dear George,

Thank you so much for sending in your question.

I always like to keep things as simple and easy as possible so let’s start like this. First thing I want you to do is open a boring old savings account. Try this link, I really like this savings account.

Now, for the next three months I want you to continue to make the minimum payment due but the first month I want you to put $300 in the savings account, the next month pay the same minimum credit card payment but this time put $400 in the savings account. The third month do the same but this time put $500 in the savings account.

If you try this custom repayment approach you will wind up with two things. The first will be money in a savings account that you can ue in case of emergency, the second will be some real world knowledge about what you can use to add to you minimum credit card payment.

So let’s say that you get to the $500 level and you are not increasing your credit card debt at all and you can get by. In that case I’d like to see you add $250 to your minimum credit card payment and put $250 in the savings account each month.

If you can easily make the $500 deposit, keep increasing it till you reach your limit. If you try this approach then you test out your monthly commitment by paying yourself first. If you lept in first, making a huge monthly payment to your credit cards that you could not sustain, you’d only get discouraged. I want your debt repayment to be reasonable, affordable and sustainable so you can reach your goal of getting out of debt.

This way you will be digging yourself out of debt but if some unexpected event happened, you’d actually have the cash to pay for it, and how great would that feel?


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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Jeff Jackson

    Nice approach. Here is another place to check for additional funds. How much of a tax refund do you expect this Year? If you consistantly get a tax refund of more than $500, you are letting the IRS keep money that you could use throughout the year, or in Steve’s plan, put in a savings account.

    If you fall into this category, strongly consider seeking qualified tax advice. The object of successful tax planning should not be to increase your refund. It should be to make sure you pay your fair share and not much more. Don’t use the IRS as a savings vehicle, it is not. The IRS does not pay interest on the money it holds for you. You cannot withdraw your money when you need it.

    Good Luck


    Jeff Jacksons last blog post..Debt Consolidation Stories

  • Trevor

    Great post.

    I suppose the key is discipline, desire, and intensity! I’ve never been in debt like that and hope to never find myself in that type of a spot (especially with interest rates as high as they are!).

    Thanks for your comments and keep up the good work! :)

    Trevors last blog post..5 Reasons To Update Your Personal Finance Budget Every Day

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