Lugging Credit Card Debt Into 2024? Now’s the Time to Make a Plan

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Mindy Neira, a financial planner in Westwood, N.J., recommended that if you were having trouble managing card debt, take stock of your spending. “The first step is to look — without judgment — at where your money is going,” she said, including housing, food, entertainment, travel and loan payments.

Then set a target for each category. (Ms. Neira said she preferred setting targets to making a strict budget, to account for monthly variations.) Ask: “Can I shift things around? Can I spend an extra $25 a month to pay down the debt?” Realize that if you took years to build your card balance, it will also take time to pay it off — so set realistic expectations.

If you are carrying balances on multiple cards, that’s a signal that you are spending beyond your means, said Rob Williams, managing director of financial planning at Charles Schwab. He advised paying off the card with the highest interest rate first by making more than the minimum payment. (This is sometimes called the “avalanche” method: While paying off that card, you make minimum payments on the others. After the first one is paid off, start paying more than the minimum on the card with the next highest rate, and so on.)

To avoid building up debt again once you’ve paid it off, try using a waiting period when shopping online, said Luis Rosa, a financial planner in Las Vegas. Put the item in the digital shopping cart, he said, but hold off paying for 24 hours. “Maybe you’ll decide you don’t need the item,” he said.

Another suggestion: Use two separate checking accounts, said Alvin Carlos, a financial planner in Washington, D.C. Use one for fixed essentials like your rent, mortgage or loan payments. Then decide how much you can afford for fun, like dining out and shopping, and transfer that amount to the second account each month. That way, Mr. Carlos said, you don’t have to stop and think about each purchase. Check your balance weekly, and when it approaches zero, you’re done spending until next month. (Ask your bank to make sure there are no extra fees for a second spending account.)

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