If you want to get rid of credit card debt, start by avoiding budgeting gimmicks. Don't overthink it. Instead, stick to a simple three-step repayment plan.
That's the advice Ramit Sethi, self-made millionaire and author of New York Times bestselling book "I Will Teach You To Be Rich," shared with CNBC's Frank Holland during the inaugural CNBC Make It: Your Money virtual event on Dec. 13.
Most people with debt don't have a repayment plan in place, or even know how much they might owe, Sethi said.
"Something I've learned from talking to tens of thousands of people in debt is that 90% of them simply don't know how much they owe," he said. "And 95% of them have no idea what date their debt will be paid off."
In that case, the solution is quite simple, said Sethi. He recommends following three steps:
- Figure out exactly how much you owe. Add up your total outstanding debt balance across all cards, either by logging into your credit card account or calling your lender directly.
- Figure out when you can pay it off. Plug your outstanding balance into an online debt payoff calculator to determine the exact month and year your debt will be paid off, based on how much you can afford to pay. This will be your goal.
- Automate your payments. This ensures that you'll make progress paying off that debt. "That's what moves the needle," Sethi said.
Too often, people worry about budgeting "gimmicks," Sethi said. This includes moves like switching to credit cards that offer lower interest rates or 0% interest for a limited period of time.
Fussing with detailed budgets isn't necessary either, he said. "I'm not a fan of budgets because they look backwards. They make me feel bad, and they don't really tell me what to do."
"The most important thing is to make a plan with your debt, then to automate your money so it's getting paid off," said Sethi.