People accrue credit card debt for a number of reasons. Maybe they have a big event like a wedding that they need to pay for. Maybe they get sick and need to live on the credit cards for a while. Or maybe they’ve just used their cards without thinking. At Second City Advisors, we’ve witnessed all of these things. In fact, getting a handle on credit card debt is one reason why so many people come to us for advice.
Fortunately, getting out of credit card debt is simple. It may not be easy but it is simple if that makes sense. When people talk with us about their debt, we offer up the following three tips to help them tackle their credit card debt.
1. Keeping the Old
One of the first things that the Second City Advisors tell clients is that they must create new spending habits if they want to gain financial freedom. Keeping your old spending habits is one way to ensure that you never get a handle on your credit card debt.
To conquer this, Debt.org recommends that you start small. Instead of going out for the daily coffee, plan on buying a thermos and bringing your coffee with you to work. Take your lunch to work instead of eating out. Borrow movies from the library instead of going to the movies. Consider consolidating the credit cards to help pay down some of the higher interest rates. These are just some of the ways you can change your debt habits. Change your habits, and once you’re done paying down your cards, you won’t have an issue with them again.
2. Create a Budget
Budgeting isn’t anyone’s favorite topic. However, according to the Simple Dollar, unless you’re willing to get rid of all your spending “extras,” you will remain in debt. So, what are the extras? They are anything that you don’t require to live day-to-day. It’s the dinners out with friends or a night at the movies. Even an expensive vacation can pull you off track.
Basically, on this kind of budget, you’re going to pay expenses, like your rent/ mortgage, utilities, debt, etc. You’re also going to put any extra money you have toward your debt. That’s why you’ll forego a night at the movies for a while (or other entertainment). You won’t need to adhere to this bare-bones budget forever. You just need to do it until you’re out of debt. Then, you can relax your budgeting efforts a bit.
3. Pay More
Typically, people only pay the minimum on their credit cards. Maybe you’re the same way. That’s a mistake when you’re trying to pay down your credit card debt. Any credit card debt you have comes with interest. That interest adds up and makes paying down your cards all the more difficult.
Pay more than the minimum amount if you want things to get easier. By combining this tactic with the previous two on this list, you’ll be putting some real power behind your efforts.
Concluding Thoughts
Paying down your credit cards counts as one of the most important steps you can take in your debt-reduction plans. Carrying a credit card balance means that you’ll always be paying more on your credit cards; you’ll pay the principal and the interest you accrue. Doing this requires you to change your spending mindset, to adopt a realistic, yet strict budget, ad to pay more than the minimum balance due on the cards
Leave a Reply