Have you finally had enough of your credit card debt? Good, I would like to help you get rid of it once and for all so that you can have a better life both emotionally and financially.
The problem with credit card debt is that the odds are stacked against you. Credit card companies use every trick in the book to get you to charge up those cards. They offer money back, airline miles and a variety of other perks to encourage spending. 50 dollars here, 250 dollars there and before you know it, you are 10,000 dollars in debt. Then, when the bill comes, they offer you nice and affordable low monthly payments. The problem is that at 20 percent interest, the monthly payment barely covers the monthly interest.
Make minimum payments and it takes forever to make any headway with your debt and that is how the card companies want it. Let’s get you out of this debt cycle.
Step One: Cut Those Cards Up
Repeat after me, “NO NEW SPENDING”. Your first step in eliminating debt is to stop adding it. You need to physically cut those cards up to prevent this. In addition, erase all of your card numbers from online websites like Amazon.
If you are real low on willpower and actually have your card numbers memorized, first order replacement cards. Tell your card company that you lost your card so that they issue new numbers. Then, when the new card or cards come in, cut them up.
If you must keep one card for emergencies, make it as hard to get to as possible. A safe deposit box is the ideal location and would prevent any impulse buys yet still be accessible if you have a financial problem. Safe deposit boxes are nice for storing hard to replace items as well. Things like passports, birth certificates and social security cards.
Step Two: Curb Your Spending
If you do not have a budget, now is the time to create one.
List out all of your expenses and include allotments for things like groceries and entertainment. Trim your budget down as much as you can to allow for paying down your debt but be reasonable. You can not go a month without spending something on entertainment and 100 dollars on groceries.
If you make your budget too restrictive, you will never stick to it. Having said that, you also need money to pay down that debt, so free up as much as you can.
Step Three: Increase Your Income
If budgeting does not give you enough money to pay down the bills quickly or if you just want to get it done faster, it is time to get some side work.
No matter how busy your schedule is, you can do something on the side to make more money. If you are reading this now, you have spare time. Drive for Uber, coral carts at Walmart, stock shelves at Safeway, whatever it takes. Every extra dollar that you make will help speed up the process and the work you go through will help to keep you from wanting to go into debt ever again.
Step Four: Be Logical
The smartest way to pay down your debt is to start with the highest interest card first.
Organize your card debt by interest rate. Now, pay the minimum payment on every card except the one with the highest interest. With that card, you will pay as much as you can each and every month. Make more than one monthly payment on that card if you can, no need to save up money until the official payday. In fact, the sooner you make a payment, the less time your debt will have to accrue interest.
Keep paying on the highest balance card until it is paid off and then repeat the process with the next highest. Keep doing this until all of your debt is gone.
Once the cards are paid off, stop using them but do not close them unless they have an annual fee. Closing an account will lower your available credit and cause your credit card score to drop. Be aware that some card companies will close inactive accounts automatically so you may need to use your card just once a year.
Step Five: Be Emotional
If logic fails you, it is time to be emotional.
Instead of paying off the highest interest card first, pay off the smallest balance card first. This will let you get cards completely paid off faster. Seeing that zero balance is very satisfying and will keep you going forward. You might need the motivation to deal with a strict budget and extra work.
Keep repeating this process, moving on to the next lowest balance card once you get one paid off.
Tina’s Final Word
Paying off credit card debt is one of the hardest things that you will do financially but it is an absolute must. If you are paying just 200 dollars a month in interest, you are losing out on a fortune. At even a modest return, that money could be tens of thousands of dollars in just ten years if invested.