Quick Tips to Slay Credit Card Debt
Lay Your Debt to Rest & Never Let it Rise Again
Credit card debt is a vice of many Americans. Two weeks ago, I paid off one credit card and did the happy dance. However, the truth is I have debt on two other cards which are next on my debt hit list. I want to be free of credit card debt by this time next year! Here are some quick tips that helped me along the way and hopefully these tips will help you too.
Take Control
Take all of your credit cards out of your wallet. Any card where you carry a balance, commit to no more new charges. Hide them in your freezer, a safe, or hand them off to a trustworthy friend or relative. Promise not to use these cards unless a major life or death crisis comes up and you have no other options.
Do the Math
Figure out exactly how much you owe. Write down the card balances and interest rates. The best way to gather all this information is to review your credit card statements. If for any reason you cannot figure out your interest rate, contact your credit card company and ask. You have the right to know this information and they are required to tell you. While you have them on the phone, ask if you qualify for a lower interest rate. If they say “yes” take it because lowering your interest rate will decrease what you owe right away.
After you add up your debt, write down what habits or purchases got you into debt and commit to changing those habits. For example, if you review old credit card statements and see that most of your purchases were at happy hour with friends; consider cutting back the number of times you go to happy hour or pay for those outings with cash. The credit card company wins every time when your $6 burger or drink turns into $28 (after interest accumulates on your purchase over time).
Put Paying Off Credit Debt In Your Budget
Review your current monthly cash flow (money coming in versus money going out). Figure out where you can cut expenses so that you can pay more towards your credit card debt, and then start your automatic payments. Once you set it — forget it.
For example, if you can put $200 towards credit card debt per month and you have two credit cards to pay down, prioritize your payments based on interest rates. The card with the higher interest rate, you should attack more aggressively. In my scenario, you would apply $150 to the card with a sixteen percent interest rate and then $50 to the card with the ten percent interest rate. This assumes that your minimum payment for your second card is being paid with your $50 payment. Once you pay off the credit card with the higher interest rate take the money you were putting to that card and add it to your payments for your remaining credit card.
Double Down and Get Debt Free Faster
It is imperative that you set up automatic payments so you do not have to remember to pay your credit cards. Eventually your balance will decrease and then disappear. Automatic payments also help you avoid late fees.
Any extra money you get from working overtime, doing your side hustles, or birthday gifts, should be put towards your credit card debt. This will help you pay your balance down faster.
Once your credit cards are paid off, use them wisely and always pay off the balances at the end of the month so you can remain debt free.
