# Amid Struggles With Credit Card Debt, Creator Shows All the Calculations to Pay It off in 6 Months

While the creator made the explanation as detailed as possible, several of her viewers couldn’t keep up with the calculations.
PUBLISHED JUN 1, 2024

Credit card debt has been a big issue for Americans with a current balance of \$1.12 trillion, according to the Federal Reserve Bank of New York's report. Since interest rates are generally high, millions of Americans are struggling to pay off their debt. Many find it scary and feel they are stuck in a debt trap. However, there are smart ways to get out of credit card debt and one such method was shared by TikTok creator, AshAllAboutMoney (@ashallaboutmoney). The creator explains how to pay off credit card debt in six months and all the calculations that need to be done.

Replying to one of her viewers in the video, the creator shows the step-by-step calculations needed to pay off credit card debt. In the first step, she writes down the limit of the credit card which is \$4,000, and the current balance, which is \$1,900. In the next step, she calculates how much the current utilization on the card should be. For this, she divides the balance of \$1,900 by the limit of \$4,000 and multiplies it by 100. This gives her the current utilization of approximately 48%.

She then goes on to calculate how much the utilization needs to go down for the cardholder to pay off the balance in six months. For this, she divides the 48% by six, which gives her 8%.

Thus, the goal should be to start at 48% utilization and go down by 8% every month, which means 40% in the second month, and 32% in the second month until it goes all the way to zero which is when the balance is paid off. She then calculates what the balances need to be each month and how much they need to go down each month. For the first part, she multiplies the limit and the percentage to obtain the ideal balance. For instance, in the first month, the balance needs to be \$4,000 x 0.4, which is \$1600.

Now to calculate how much the balance needs to go down, she multiplies the limit by the percentage that the balance needs to go down every month. For the first month, this would be \$4,000 x 0.08 which is \$320. However, interest has to be added to this, this means if the card has an interest rate of 30% the interest comes out to approximately \$50 (\$1,900 x 0.3/12). Thus, for the first month, about \$370 needs to be paid toward clearing the balance. The creator notes that the interest amount will fall each month as the balance decreases.

While the creator made the explanation as detailed as possible, several of her viewers couldn’t keep up with the calculations. “The step-by-step is easy but the math isn’t mathing for me either. I’m subtracting everything at the end of the calculations and it’s saying I’ll still owe \$487 when it should be 0,” wrote user, @casperthefit.

Meanwhile, those who could keep up had some doubts regarding the calculations, which they cleared up. “Is it better to pay off a card fully at once or should I split the money between two cards to lower the utilization?” another user @klr1197 wrote.

@ashallaboutmoney Replying to @Ko here’s how i would plan to pay this credit card off in 6 months! #credit #score #tips #howto #creditcard #card ♬ original sound - AshAllAboutMoney

For more such tips on paying off debt and personal finance advice, follow AshAllAboutMoney (@ashallaboutmoney) on TikTok.

POPULAR ON MARKET REALIST
MORE ON MARKET REALIST