Credit cards make buying things easy. Getting out of debt after amassing tons of debt for using credit cards is not easy at all. You are probably under piles of credit card debt if you are reading this article. Though it is a daunting task, here are three of the best strategies to use to get out of credit card debt as quickly as possible:
The first method is to tackle your debt wisely.
When you pay just enough for your monthly credit card fee, you are paying mostly interest and less on your actual credit card balance. Learn your interest rate and find a way to pay more than that amount—as much as you can—so that you will see a difference in your actual debt.
It would be helpful to first pay off the debts with the highest interest rate. Approach your credit companies and tell them your situation to see if they can help you in any way.
Do not close the credit cards that still have existing balances because this will bring down your credit utilization, which is the ratio of available limit over your current debt. This will lower your credit score.
Look for long-term, low-percent or no interest rate transfer programs and move your debts around. This will hurt your short-term credit, but this can help your long-term financial condition.
Let go of the big-ticket items you are paying through installment. Ponder upon the big items you can let go, and have the strength to make the sacrifices.
The second method is to budget your money properly.
Don’t be oblivious in paying your credit card. Know how much you used, how much your actual debt is, and how much interest you will be paying. Budget your money properly and create a strategy in paying your credit card debt.
Put your strategy or your plan in writing to make it more clear. Take note of your spending so that you will know where your money is going. This will also help you budget your expenses properly and only buy the things you really need, instead of being hypnotized by all those advertisements which will result in you overspending.
Take advantage of your tax refund and set aside a big amount of it to pay off some of your credit card debts.
Cut off some of your small luxuries and vices. You can have your coffee at home instead of buying one from Starbucks, which is three times more expensive at least. You can also save loads of money if you quit smoking, eat less, or minimize your drinking habits.
Set money aside for emergency expenses. Sometimes, your credit card is the best resolve when an emergency arises, even a small one. But this will hurt you big time in the future. So, it would be better to use the cash you’ve set aside during these emergencies.
As you see your credit card debt going down, you might get the impulse to reward yourself by having a dine out or buying yourself the new iPhone model—don’t. It only defeats the purpose of paying off your credit card debts.
Stop abusing the power of your credit card. The scene from Confessions of a Shopaholic where she freezes her credit card might be funny, but that could be an effective way of paying off credit card debt. The protagonist in the film has a weak resolve and still broke the ice, though.
The third step is to finally get out of debt.
Be smart enough to not increase your daily, weekly, or monthly spending anymore. If you have credit cards that are already maxed out, then stop using them or, better yet, cut them in half. Just use one credit card, and use it only for emergency purposes. You can also use it for things that you can pay off quickly. Do these things until you have managed your finances properly. This will lead you to have full control over your spending.
It is easy to say “don’t increase your spending,” but it is actually quite difficult to do. It requires much discipline and resolve. Just like gaining weight, you have to pay your debts gradually, because you didn’t get caught up in piles of debt overnight. Have enough discipline, perseverance, and resolve to never give up on the strategy you have set up to pay off your credit card debts.
Ultimately, if you want to change your credit standing, you have to make changes on yourself, especially your attitude. A change in spending attitude and paying attitude could help you pay off your credit card debt quickly.