How can you get rid of credit card debt? That question seems to be popping up more and more often these days. And that comes as no surprise, as credit card debt is actually one of the most common financial issues that people are dealing with nowadays. In fact, different studies show that many American households have an average amount of over $14,000 in credit card financial obligations. So it only makes sense for people to try and find a way to deal with their tricky financial situations. If they do not take any actions, things will only get worse. If you are struggling with paying off your credit card debt, you may find all the information that you need, the methods and tools that can help you get on top of your financial problems.
How to pay off credit card debt and sustain a debt-free way of living
Even though you may just want to focus on getting rid of your credit card obligations, and you cannot really be bothered about what will happen next, you need to look at things from a different perspective. It is one thing to pay off your debt, it is a whole different story to manage to sustain a financial state of debt-freedom. You must not let the mistakes that got you in this uncomfortable financial situation in the first place to dictate your life after you managed to get out of this situation. Getting better and the debt repayment process, learning how to use the different tools, methods and financial strategies will definitely help you get rid of all of your financial obligations. However, it may not be enough to help you sustain your financial freedom. This is why we are not only going to give you the tools to improve your debt repayment, but we will also give you some ideas on how to transform your thinking.
How to pay off credit card debt
If you have been struggling with your credit card financial obligations for a while now, you probably realize that there are some things that you are basically doing wrong, and you can improve on. Usually, nobody is well prepared to deal with debt. That is why many people are making lots of mistakes with the way that they are approaching the repayment process of these financial obligations. If you do not really know what you are doing, you cannot really expect great results. That does not mean that you cannot get rid of debt without using an actual debt repayment strategy. What it means is that by actually taking advantage of a specific repayment methods and financial tools, you would be able to get better results in a much shorter period of time. So let’s first talk about one common mistake that many people make when they are repaying their credit card obligations. We will give you two simple methods that you can use to improve your repayment process and get much better and more efficient results.
The mistake of minimum payments
You may have been told by your credit card company or by some of your friends that making only minimum payments on your credit credit card balances is actually a good strategy, as it does not allow the debt to grow and you can easily manage with paying your other life expenses while repaying your credit card financial obligations. However, what they may not have told you is that if you keep following this path, you may very well keep on repaying your balances for the rest of your life. You need to understand that if you pay only the minimum on your credit card balances, you are barely touching the actual debt if you are even touching it at all. What you are paying is just the interest rate. So you would have to make a choice. You would need to decide whether you want to keep having a few unnecessary additional smaller monthly payments for the rest of your life. Or do you want to go through a through the hard journey of actually repaying your debts and never have to pay a single dollar on these balances for the rest of your life again? If you have chosen the latter, it is time for the next step.
Two ways to tackle your credit card debt
- The snowball method
You have probably played with snow before.Then you know how you can start rolling a snowball and end up with massive one in no time. This financial method for debt repayment follows the same logic. If you look at your debts, and you see the one with the smallest debt amount, you may initially see it as the most irrelevant of all. However, that perspective will not allow you to see the opportunities that are in front of you. The snowball method works like this:
- You list all of your current debts and determine which is the one with the smallest amount. Then you attack this debt with most of what you have. You focus all your attention on it until it is gone. By doing this, you will reduce the overall number of outstanding credit card balances that you need to pay off. That alone will give much-needed confidence and momentum. Repeat that action until you get rid of all your financial obligations.
The highest interest rate is the one to target
With this method, you would need to aim at your highest interest rate debt. It may sound like a scary thing to do, but the outcome would make it all worth it. Interest rate is what gets most of your money. So if you get rid of the one debt that has the highest interest rate, you would able to free up a lot of space in your budget and you will find each debt that follows to be a lot easier to deal with.
How to make sure to never end up in debt ever again
The tips that we are about to give you will not only help you to repay the money that you owe but will also help you to sustain a free-of-debt living. Here are some things that you need to review and change if you feel is necessary.
Start tracking your expenses
If by now, you were living without really calculating and keeping track of where exactly your money goes, you may want to start doing it. Keeping track of your expenses will allow you to set aside the good financial decision that you make for the poor ones. You will probably see a lot of money being spent on things that you cannot actually remember that you have spent your money on. By minimizing unnecessary costs, you will find it much easier to sustain a good financial state.
Get rid of bad habits
If you are used to eating out at restaurants and fast food chains or partying in clubs on regular basis, it is no wonder that you have problems with your finances, especially if your income is not exactly suited for the high life you are trying to live. You can change all that by reducing your fancy restaurants and clubs visits, and start cooking your meals at home and inviting friends over instead of going out.