card debt is nothing new. Millions of people around the world are getting themselves into ever greater levels of it.
Indeed, consumer debt recently surpassed the almighty $4 trillion mark.
That’s a scary figure, and a shocking level of debt to find ourselves in. Of course, being in debt is no laughing matter. With crippling interest rates and a never-ending list of repayments to make, life can quickly become one giant financial burden.
It’s in everyone’s interest to get out of debt as quickly as possible. However, that often feels like an impossible task. Thankfully, it doesn’t have to be.
With a few sacrifices and a sensible approach, you can haul successfully get debt free in a relatively short period of time. Sound good?
Keep reading to learn exactly how to handle credit card debt to become debt-free quickly.
1. Know the Damage
Debt can feel scary.
Instead of confronting the issue and dealing with it, many people simply choose to bury their head in the sand. Unfortunately, all that leads to is a worse situation down the line.
The first step towards getting out of debt is understanding how much you owe.
As in, the total amount! How much credit card debt are you actually in? You’d be surprised how many households around the country have no idea. They just keep spending, missing payments, and perpetuating the cycle.
Now isn’t the time for estimates, either. Guessing isn’t good enough! Ballpark figures won’t help. Sit down and get real. Write down the sum total of all your credit card debt.
It can feel scary. However, be brave! Doing this is absolutely vital to creating a plan of action.
2. Figure Out Your Finances
Hopefully, you’ve now got a figure to work towards.
Well done! Scary as that number might seem, you’ve made great progress.
Now, though, it’s time to take stock of your monthly income and expenses. It’s essential that you know where your money comes from, and where it goes. Indeed, this is the first rung up the ladder to cut costs (more on this later).
Sit down and take a look at your cheques and balances. How much do you earn on a weekly and monthly basis? How much do you spend in total, and in what areas of life?
This data is central to understand how to hone your monthly expenditure. You might need to take a week or two to track your spending. Indeed, there are many phone apps that can help. They’ll sync with your bank account and keep tabs on your spending habits.
3. Contact the Credit Card Companies
Okay, now you know where you stand in terms of debt and expenses.
Next up, damage limitation.
Each of your credit cards will have a certain rate of interest attached to them. That’s why the amount you owe always goes up so fast!
Call up the credit card company to discuss the rates you have. From there, ask if they’re any way of cutting them down. Sure, your credit rating may play a role in how likely this is of happening. Poor credit means it’s less likely. However, it’s always worth a shot.
You’d be surprised at how much you can save with even small rating cuts. Remember, don’t ask, don’t receive. There’s no harm in trying.
4. Start Cutting Costs
Let’s face it, there are only really three ways out of debt:
- Spend less (save more)
- Earn more
- Combination of 1 and 2
Option three will be most conducive to getting out of debt quickly. However, you might not have that luxury. Your income may be fixed, and the job market may make it hard to secure more money.
The easiest approach is usually to spend less money!
You now know exactly where your money goes. That’s a major help in determining when you can save. Maybe you go out for dinner a lot. Perhaps you pay through the nose for your phone bill each month. You might have masses of useless subscriptions that hemorrhage money each month.
Whatever the case may be, look for opportunities to cut costs.
Eat in. Stop paying for the gym. Downgrade your mobile phone. Stop going out all the time (or go out less often). And so on.
Remember, the more you cut, the more you can redirect to paying off your debt.
5. Sell Your Possessions
Sometimes you need money quickly. Selling your stuff can be a good way of getting extra money.
Sure, this may not be ideal! Likewise, it isn’t a long term solution to your debt problems. However, if you’ve got more than you really need, and could do with a decluttering, then it may not be a bad idea. It’s a definite way of getting a cash injection that can help out in desperate times.
Likewise, if it means earning enough extra cash to pay the next few months’ credit debt, then it’s worth considering.
Hold a yard sale, advertise on Craigslist, and so on. Of course, another way to pay off credit cards and get money quickly is taking on another loan. However, hesitate before doing this. Sure, you get funds quickly (and if the interest payments are lower, then it’s arguably worthwhile). That said, taking on more debt is rarely the best solution to having too much debt in the first place!
6. Start Paying Off Your Debt
Taking action is often the hardest part.
It’s easier to pretend there isn’t a problem. The first step is the hardest though. From there, you gather momentum and gradually snowball to success.
It’s time to start paying off that debt.
You have two options. Arguably the most sensible is to direct all of your newfound cash to pay off the highest interest credit card first. On all of your others, keep up with minimum payments.
This may take a reasonable amount of time. However, getting rid of the highest interest card is a big win. When it’s paid off, you’ll have more cash to direct to the others.
Final Thoughts on How to Handle Credit Card Debt
There you have it — exactly how to handle credit card debt and get debt-free.
Credit card debt is crippling households around the country. Unfortunately, it’s all too easy to get into debt; getting out of it is the problem! High-interest rates and exorbitant fees for missed repayments can quickly add up to a problem.
Thankfully, getting out of debt is absolutely possible. Hopefully, this post has highlighted how to do it.
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