In many developed countries, particularly the United States but elsewhere as well, personal financial debt is just a way of life. In some ways, debt is a necessary evil, simply because without some debt, you cannot properly build your credit such that you can do things like buy a home or a car. Still, many people find themselves trapped in a sick cycle of debt that spirals out of control and threatens to ruin all your future dreams and present goals. Credit card debt is perhaps the most insidious and prevalent of all types of debt, just because it’s so easy to acquire and use a credit card. If you’ve found yourself buried beneath a mountain of debt, don’t fear.
1. Figure out how many cards you have and how much you owe per month.
When you have lots of credit card debt, you can sometimes feel overwhelmed. Most of this frustration usually stems from just not really knowing the details of how many payments you have to make and how many cards you have. Sit down and get organized. Look through all your statements and figure out how much you own on each card, what the interest rates are, and how much the monthly minimum is. Taking this first step is often the most important step in helping you get out of credit card debt.
2. Consider paying off the card with the highest interest rate first.
At the moment, maybe you are paying off the same amount of money evenly on every single one of your credit cards. While this sounds like a great idea, it’s not the most efficient way to pay off your debt. The best idea is to focus more on paying off the credit card with the highest interest rates, because this is the one that’s sapping you of your money more quickly than the rest of your cards. The quicker you pay off this card, the closer you’ll get to a credit debt-free life.
3. Automate as much as you can.
Most people accrue a bunch of credit and other debts not because they cannot afford to pay it off, nor because they abused their credit card, but simply because they forgot to pay off some bills every once in a while. Credit card companies heavily depend on your forgetfulness, but it doesn’t have to be that way. In our computer-dominated age, nearly any financial transaction, especially bill payments, have the potential to be automated. Log in to each credit card’s site and figure out how you can do this. That way, you don’t have to worry about missing a payment every again.
4. Use your credit card sparingly.
Of course, this goes without saying. But once you have a handle on your debt and have committed to paying it off, be sure to use your credit card only for small purchases. Most financial advisers say that your credit card purchases should make up about 10% of your take-home pay to stay in control.
Getting out of debt, for most people, is a long and winding road. But it’s not impossible! Just be consistent about paying things off and living within your means, and you’ll be out of debt before you know it. Good luck!
Stella Walker is a former financial adviser who’s now a freelance blogger. She enjoys giving her readers advice about personal finance, careers, parenting, and more. Read more of her writing at www.creditscore.net. Stella welcomes your comments below!