Tired of living under the constant pressure of multiple monthly payments on several credit card balances? If you are tired of living under such constant stress and are ready to begin your journey towards debt freedom, you may have just come to the right place.
Is credit card debt really that big of an issue?
It is most certainly yes. Many Americans are experiencing troubles with credit card debt, as studies even show that the average amount of money that the average American household owes to creditors is about $15,000. Now, imagine having to pay all of your normal monthly expenses, such as food and regular monthly bills like the electricity bill, while also having a sum of $15,000 to repay.
How do people manage to get rid of the credit they owe?
The reality is that for every person, the road to financial freedom is always going to be a bit different. This is only natural since each person’s financial situation is specific and unique and so the solutions for his financial problems are going to be different. That does not mean that there are no general methods and tools which you can use to achieve this goal. It just means that which exact tools you are going to use and how you are going to use them for the specifics that your financial situation requires are ultimately going to determine your end results.
So there is no best way for paying off credit card debt?
That best way is going to be different for everybody. In the article below, we will give you some advice on how to approach your credit card debt repayment process and how to improve your budget management. It is safe to say that you are the most important factor that can determine whether your battle with credit card debt is going to be a success or not.
How to pay off credit card debt
Since there are many different ways in which a person can overcome his problems with credit card financial obligations, we are going to give you two main strategies that you can combine to reach your desired goal. We are going to give you a few fundamental ideas on how you should change your lifestyle, the way you manage your finances and the way you should approach your credit card debt repayment. Secondly, we are going to give you some clear methods that you can use to repay the money in a faster and more efficient way. So let’s get started:
Learn how to manage your finances
You may be aware of this, but if you got to a place where you can barely manage to pay your regular bills and your credit card obligations, then there is a big chance that you are not doing a really good job at managing your budget. Poor finance management is one of the main reasons that cause so many people to struggle with all types of debt, especially credit card debt. So to improve your chances of dealing with your financial problems, it is crucial that you determine your weaknesses and after that, try to fix them and turn them into strengths.
Start keeping track of all of you expenses
One way that you can get an understanding of where your financial mistakes lie is to track your every single expense. By doing so, you will be able to clearly see how much money you are spending on things that you do not need or things that are way too expensive for your salary. Keep in mind that while it is not a pleasant thing to do, changing your lifestyle can have a massive impact on the overall outcome of your debt repayment.
Make the necessary changes
Once you are able to see what your bad habits are, you may want to ignore your mistakes and continue making them. However, if you want to improve your financial stability, you would need to take action and make the necessary adjustments. If you are used to drinking your coffee at Starbucks, having lunches and dinners at restaurants, you would obviously need to accept that you would not be able to keep going that way if you want to be able to pay off your financial obligations. It is actually not that big of a deal to start cooking your food at home, start making meal preps for your time at work, and instead of having dinners at restaurants or going to clubs with friends, try inviting them over for a night of movies and games.
Sell all that is worth selling
When you are trying to get out of multiple debts on several credit cards, you need to understand that any additional cash you can get a hold of can really speed up your repayment process and boost your chances for a final success. If that means you should sell some stuff that is probably just taking up space in your house or your apartment, then so be it. There are many internet platforms that you can use to put your stuff for sale, and you might actually be able to get a pretty good price for the things that may be worthless to you.
Tackle your debt wisely
Now that you know how to cut out some of your unnecessary expenses and how to add some dollars to your bank account, it is time to discuss how you should approach your debts. You need to understand that credit card companies do not want you to get rid of your debt. So when they say that you should only make minimal monthly payments to all of your accounts, that should automatically tell you that following this advice will not get you any closer to the debt freedom you desire. If you have a clear plan, a clear vision of how you are going to repay your debts, you will be able to do it in a much easier and faster manner. So here are two repayment methods that you can try out:
Snowball your debts
With this method, your goal is to list all your credit card balances, and to set them in order from the smallest debt amount to the largest amount. After you have a clear idea of which one of your credit card balances is the smallest, throw the majority of your funds at that account. By following this method, you will be able to quickly see the numbers of your credit card debts starting to reduce, which will give you the much-needed confidence to go all the way through.
The highest interest rate needs to go
The second method involves throwing most of your funds at the credit card balance with the highest interest rate. Think of it this way – most of your money goes to paying interest rate, so it is only logical to get rid of the balance with the highest interest rate first, as this is the one that is taking up most of your money. So focus on your highest interest rate, make only minimum monthly payments on all of your other accounts and once you are done with that debt, you will feel how easier it will all get.