6 Credit Card Payoff Tips In 2020

Dear reader,

In the late 1980s, I went to a seminar on financial success. The instructor, a young charismatic speaker, went on and on about the perils of debt, saying repeatedly, “Debt is bad. Debt is your enemy. Get out of debt as soon as you can.” Looking around the room at approximately fifty attendees, I could see most heads were nodding in agreement.

Just before the break, the young speaker asked, “Okay, are you ready to cut your ties with the bondage of debt?” Most attendees nodded. “If you are ready to break the bonds, then stand, get out your credit cards, and hold them up high so everyone in the room can see them.” Most of the class stood immediately while there were several people who were looking around waiting to see if we should follow or not. Slowly, everyone stood, myself included. I figured that since I had paid money and invested this much time, I might as well go along with the process to see what I could learn. 

As I held my gold credit card in front of me, a smiling assistant handed me a pair of scissors. As I grasped the scissors, I knew what was to happen next. “Okay, class, cut your credit cards in half,” said the instructor. As I heard the sounds of scissors cutting through plastic, there were actually several cries of shock, some groans, and even a few people crying. After cutting my card in half, I just stood in silence, mostly numb, waiting for some form of educated enlightenment to sweep over me. Nothing happened. I just felt numb. 

Although I had been in credit card trouble in the late 1970s when my nylon and Velcro wallet business was caving in on me, I did eventually clean up my debt and had gone on to use my credit cards more responsibly; hence I did not have the same cathartic reaction some people in the class seemed to have when they cut their cards in half.

In less than a week, my replacement card had arrived in the mail and I was happily on my way, using my gold card again. Although I did not have a blinding cognition after cutting my credit card, the process did make me more aware of how much of a problem credit, primarily its use and abuse, can be in a persons’ life. 

Today I watch many so-called financial experts saying the same things that young instructor was saying years ago, such things as “Get out of debt.” 

“Cut up your credit cards.” 

“Put your credit cards in the freezer.” 

The problem I have with much of their advice is that they tend to blame the credit card as the problem, rather than the lack of financial control and financial education of the card user. 

Blaming one’s credit card for their financial woes is much the same as me blaming my putter for my high golf score.

Credit and debt are very important subjects in anyone’s life. Today, young people while still in school are actively solicited by credit card companies, which have often caused me to ask, why don’t we teach young people about money in school? 

Why do we have to wait until young people are deeply in credit card debt and in debt due to school loans before we realize there is a problem? If you ask most young people, “What is the difference between credit and debt?” I doubt many could tell you the difference, and yet we let financial profiteers educate our youth.

The good news is that even though most of us cannot control our national irresponsibility, we can take control of our own finances. So are debt and credit bad, as so many financial experts say? 

Absolutely not. 

Debt and credit are powerful financial tools that have allowed many in the world to enjoy the highest standard of living in history. Without debt and credit, we would not have such things as great cities, massive industries, airlines flying us to all parts of the world, resorts to relax at, excellent food at exciting restaurants, new cars to drive, comfortable homes to live in, and so many choices of entertainment.

So if debt and credit aren’t bad, then what is? In my opinion, a lack of financial education and fiscal responsibility are bad. I think it tragic that my parents’ generation, the World War II generation, has left massive debt for my generation; and my generation, the Vietnam era generation, has done the same to our kids.

If you have found yourself in over your head in bad debt, there is a way out. Below are my six simple steps to paying off your credit cards so you can start fresh and start using debt for good. 

#1 Stop Spending

The reason many people fail in the process of getting out of bad debt is they cannot live without instant gratification. Many will sacrifice a richer tomorrow for a few indulgent purchases today. I did not make much money in my 20s and 30s, but I make millions today.

I’ve been there and lied to myself plenty of times. It wasn’t until I started having the emotional maturity, to be honest with myself and making sure my actions were in line with my goals before I started making actual progress towards those goals. 

I would say that when it comes to money, emotional intelligence is the most important intelligence of all. It is more important than academic or professional intelligence. Develop your emotional intelligence so that you have the fortitude to stop spending money on things that do not help you get out of bad debt. 

#2 Pay Yourself First

Start saving your money. 


Save your worthless, inflation-bitten money, but just some of it. 

Let me explain. When Kim and I were getting out of debt, we knew we wanted to get out of debt FAST! 

We knew how to save our way out of debt, but we wanted to invest our way out of debt too. This is where the magic is. When you get your paycheck, do not use all of your money to pay your bills. Save some of your money. As much as it hurts to say, save some of your money. 

Kim and I saved thirty percent of our money for our future. This was not as easy as it sounds. We had to have the emotional maturity to stop buying things we did not need and eating out less. We also had to have the maturity to accept that by saving money for our future we did not have enough to pay our current bills. It was scary. Bill collectors called regularly. Bill collectors are not exactly friendly when you are not paying their bills. Kim and I purposely put ourselves under constant fire. That is motivation!

What did this motivation do for us? It did two things. First, we became highly motivated to find extra income and work. Second, we became very aware of opportunities all around us.

#3 Look for Opportunities

The sooner you realize that a paycheck is not going to save you from bad debt the easier your life will be. So what is going to help you? It’s really a quite simple answer, but something that isn’t necessarily easy to do. You have to train yourself to start seeing opportunities.

What does that mean? Once you start using your brain instead of emotions, your mind will show you ways of making money far beyond what you could make as an employee. You will see things that other people never see. Most people never see these opportunities because they’re looking for money and security. The moment you train your brain to see one opportunity, you’ll see them for the rest of your life. 

#4 Find Your Asset

When you use the money from your “Pay Yourself First” savings, you need to first buy the education that is going to teach you how to buy or create an asset. Check your local area or search online for courses on investments or businesses you’re interested in and passionate about. Once you get some courses and training done, continue to save until your “Pay Yourself First” savings can be used to put your education into action.

When I bought my course on real estate, I immediately went out and found deals. They were not the deals I invest in today, they were very small and they were what I could handle at the time. 

My mindset was not large enough to believe I could invest in huge multi-unit apartments successfully. I had to start small and learn the lessons from experience, as well as grow my own confidence.

When looking at investments or business, make sure it’s something you’re truly passionate about. Once you figure out what that is, get educated, put that knowledge to use, and start acquiring your assets.

#5 Pay Down Debt With Your Cash Flow

Now, it’s time to start reaping the rewards of what you set out to do: Pay off your bad debt.

Just as I’ve suggested before, tackle your credit card debt by paying off the card with the smallest balance first (ignore interest rate). Then, once that card is paid off, use the extra payment to pay off the card with the next smallest balance, and so on. 

This method allows for faster wins with each bad debt being erased quicker and a greater success rate. 

#6 Celebrate And Repeat

If you’ve diligently gone through the steps, you will have deserved it. You’ll have accomplished what most of the world only dreams about. Celebrate!


Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

You May Also Be Interested In:

Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

View More By Robert Kiyosaki