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How to Get Out of Credit Card Debt

April 30th, 2020 8:15 AM by Jackie A. Graves, President

Now Is The Best Time To Pay Off Your Credit Card Bills

Getting out of credit card debt isn’t an easy thing to do, especially if you don’t have sufficient income to make progress on your debt obligations. Even though it’s not easy, it is still a feasible goal if you take the right steps and focus on the task at hand! As long as you take the time to effectively plan and create a new budget, you can get out of debt and achieve financial freedom. However, you must understand, your credit card debt was not created overnight and odds are you will not get rid of it overnight either. Most people accumulate credit card debt due to life changing circumstances, like a change in income or increase in monthly expenses. Getting yourself out of debt (especially high interest revolving lines of credit) will allow you begin life your anew and help you establish a completely new financial future for yourself. Besides this, having less debt on your books will make you happier and less stressed all around. 

If you are tired of searching for uninformative articles regarding the absolute best way to become debt free, then look no further. This article will give you practical plans that really work!

Below are the best strategies that will help you to get out of debt: 

Analyze How Much Debt You Have:

Before anything else, your very first step should be to accurately assess how much debt you have and create an income and expense report based on your personal finances. If you do not know exactly how much debt you are in, then you cannot properly assess the solution to your financial qualms. You must know the underlying problem before you begin to attempt to solve your financial issues. You can do an income and expense analysis on an excel sheet or an even in a notepad, both will get the job done. After you write everything done, make sure you double check all information pertaining to your finances. Make a list of every creditor and debt account and then jot down your monthly take home pay. Subtracting your monthly income from your monthly debt obligations will provide you with your monthly disposable income. Once that is accomplished, you will know just how much money you have to utilize towards debt repayment each month.

Start with a Change in Your Lifestyle:

If you really want to make a life change and aggressively pay down your credit card debt, you will need to change the way you handle your money and with it your lifestyle. This requires a bit of analysis on your part, but as long as you cut out unnecessary expenses you will be fine. If you can break everything down into life necessities and luxury/entertainment expenses, it will make it that much easier to figure out how to cut down on expenses.  What were the conditions when you decided to get money from others? Most importantly, you must change your spending habits and make a budget of all your revenues. Make a list of every of your expenditure and keep a record of it timely.

Considering Getting Professional Debt Help:

If you find managing your finances on your own a near impossible task you should very well consider debt relief options to ease your financial burden. There are many reputable debt relief companies and debt relief programs that can help you get out of debt and save money every month. Make sure to do your research and only go with debt relief companies that do not charge upfront fees and genuinely care about bettering your financial situation. It is crucial that you research the debt relief company before enrolling in their program! However, this may very well be the easiest way to pay off your debt and not have to worry about doing the hard work on your own.

Stop Impulsively Using All of Your Card Cards:

One of the practical steps you can take in order to achieve financial freedom is to stop utilizing all of your available credit cards and stop impulsive purchasing decisions. In this regard, if you stick to just one revolving line of credit you can better manage your finances without have to rob Peter to pay Paul every month. This tip is widely accepted by experts as one of the most crucial in helping you to become debt free. Things tend to get very messy when you charge and make purchases using multiple credit cards. Moreover, consider removing your saved credit card information from your computer and phone. If you do not have your credit card information saved on autofill you will be required to work harder in order to make a purchase and will therefore second guess it as being a necessity. Consequently, this will prevent you from getting deeper into debt and finding yourself helpless. This is an extra step that really works in preventing yourself from purchasing any product instantly.

Stop Inquiring About More Loans!

If you stop making credit inquires and try to get rid of your debt without borrowing more to pay it off, you will undoubtedly be better off for it in the long run. If you focus on handling the issue on your own, this will not only help you to be debt-free but also stop your debt from increasing. When you keep on creating more debt while you are already repaying debt, it is nearly impossible to make progress on what you already owe. Although sometimes you can consolidate with one loan, qualifying for a decent interest is typically very rare. If need, lessen the temptation of creating more debt by even cutting up or freezing your credit cards.

Try to Increase Your Monthly Payments:

If you are paying off only small amounts of your debt, it would take much more time to completely get out of debt. If it is possible you should always try to be aggressive whenever you can. However, if you cannot afford to do so, the debt snowball method is probably advised, where you pay off smaller balance individually and move to the next. Moreover, by the time you finish repaying your balances with just the minimum payments, you will have already paid double, triple or quadruple of what you initially borrowed. It is fine to pay only the minimums if you are implementing one of the above strategies to pay off your debt, but you must remain prudent with your budget in order to do so.

Save For an Emergency Fund:

An emergency fund may seem out of reach if you are currently struggling to become debt free but once you do manage to pay down some debts it is essential you take the necessary steps to prevent it from happening again. A rainy-day fund will allow you to feel more secure about your financial future and once your debt is paid off it is always advised you set one up. However, it is crucial to understand the opportunity cost of your money, it is never advised to leave savings in the bank if you have debt that is currently accruing interest payments. All available funds should go towards paying off your debt and eliminating interest payments altogether.

Pick One Credit Card Account and Give It All You've Got

It is always advised to do a debt snowball method and knock off each credit card balance one by one, as opposed to slightly paying above the minimums on each of your accounts. With this method you will make more progress on your debt quicker and be able to pay off each account one by one and have less to worry about. Many people increase all of their minimum payments just by a little, but in this way, your payments may only fall by a little amount every month and a large chunk of your payments is being absorbed by interest payments. Tackling each credit card account one by one is advised because psychologically it will also make you feel more accomplished. You will feel relieved that you completely knocked out one account, as opposed to have slightly lower minimum payments on all accounts. Whatever your desired method in becoming debt free, you have to stick to your guns and maintain restraint! You can accomplish anything you put your mind to! This is only a small blip on the radar and you will eventually pay it off and be a better person for your financial struggles.

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Posted by Jackie A. Graves, President on April 30th, 2020 8:15 AM

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