If you are finding that your credit card debt is just piling up then you may want to pay it off and get out of your credit card debt. There are a number of ways that you can get out of credit card debt, so keep reading to find out how.
How to Get Out of Credit Card Debt
Know What You Owe
The first thing that you will need to do before you can start to reduce your credit card debt is to know what you owe. You need to be honest and write the debt down as well as the interest rate that is charged on the debt for every card that you have. This will give you exactly what you owe in total.
Get a Better Rate
One way that you are able to save on your credit card debt is to negotiate for lower interest rate. This can help you to save money whilst you pay down your debt. Your credit score will play a role in whether your credit card company is willing to lower the interest rate. However, you should call each credit card company that you are with and request a lower interest rate. If you manage to get this then write down the new rate.
Know What You Spend
You should write down all your committed expenses each month like your mortgage or rent, utilities, insurance, phone, internet, minimum credit card payments and other such things and then keep track of your other expenses like entertainment, meals out etc. This will form the basis of your budget. You should look at a year’s worth of bank statements and credit card bills to get an accurate monthly spend and keep tracking your expenses.
Make a Budget
Once you know what it is that you spend, it is time to start cutting those expenses. There will be some sacrifices that you will need to make but you need to be realistic as well. Even little adjustments can help you to save money. You should also have some breathing room in your budget in case any unexpected expenses crop up.
Write down at least three ways you can immediately cut back and consider downgrading or cancelling some services.
How You Going to Pay It Off
There are two main strategies that are used to pay off credit card debt. The first one is to put all your extra cash into the highest interest card whilst you pay the minimum on the others. This is the fastest way to lower your debt. Once, you have paid off the first card, you will have even more money to put towards the second highest interest card and so on.
The second way is to the pay the card off with the lowest balance first and to pay the minimums on the others. This is not the most cost-effective strategy, but it is the fastest way to get rid of debt on a single card and it will motivate you to carry on.
Put the Cards Away
Credit cards often lead people to spend more than they can afford, because it is easy. So, if you are tempted by your credit cards, put them away and look at only using cash. This will make you more conscious of money.
Track Your Progress
Always keep an eye on your spending and have a look at your progress every few months. You need to accept that it will take you a while to get out of debt, but stick to it for a while and you will be able to get out of credit card debt.
Wait…So What Do You Have to Give Up?
What You Will Need to Give Up to Get Out of Credit Card Debt
The fact is that if you want to get out of credit card debt then you will need to give up a few things.
Keeping Up with Your Friends
You can end up spending more money than you have because of your friends. You may see what they are wearing or the gadgets that they have and also want this, but do you really have the money to keep up with them?
You should stop looking at everything that your friends have, which will help you to avoid temptation. It is your life and you need to be content with what you have and what you can do. Stop looking at your friends and basing your spending on what they do and have.
Ignoring your debt is never a good idea because it won’t just go away and also don’t lie to yourself by saying that you have it under control when you don’t. The longer you wait to tackle your debt the more interest you will owe. Take ownership of your debt and tackle it.
Going Out to Eat
Eating out can quickly add up and the fact is, it is cheaper to eat at home. Instead of ordering lunch at work, pack a lunch the night before to take to work. You can also prepare your weeks meals on a Sunday and freeze them. This is convenient as you will always have something to eat and you will be less tempted to go out and eat or order takeaway.
If you are deep in debt then you should consider ditching the plastic altogether and only use cash. This will help you to save money, because you will not be tempted to stick everything on your credit card. You will also be more mindful of money as you can only use the cash you have.
Every week, draw a certain amount of cash for that week and commit to only spending that amount. This will also give you a better idea of just how much money you are spending, because you may find that cash can just disappear.
Getting out of credit card debt is not quick and easy. You will need to make cut backs and use that extra money to pay off your debt. This is the only way that you can start living a debt free life.