How to Get Out of Credit Card Debt

Credit card debt can drag you down and prevent you from living a better life. Many people do not have debt on just one credit card but rather several. This debt may be combined with other forms of debt such as student loans, car loans, personal loans, and a home mortgage to weigh down a person’s budget. Credit card debt, however, generally has a higher interest rate imposed on it than other forms of debt, and interest rates in excess of 20% are common. Some people who carry high balances on their credit cards pay several hundred dollars per month in interest alone to their credit card companies. Because of this, many people who want to get out of debt do opt to begin paying off their credit cards first.

Credit Card Debt

Find Extra Cash

In order to pay off credit card debt in the fastest way possible, you do want to put as much money as you can towards your monthly credit card payments. Taking time to analyze your budget and cut back on expenses is a first step towards paying this high interest debt off. The more money you can free up now equates to less time overall to pay your debts off. So consider eliminating cable TV, cutting off your home phone service, avoiding eating at restaurants, and more. Your goal should be to live below your means. This can be tough to do, but once your debts are paid off, you can consider adding back some of those luxuries that need to be cut today.

 

Target One Debt At a Time

If you have one credit card, then take every extra dime you can find to pay as much of that debt down as you can each month. If you have more than one credit card, you will need to make a decision about which card to tackle first. Many people opt to pay down the card with the lower balance first, as it will take less time to pay off. If your accounts are fairly equal with regards to outstanding balance, consider targeting the account with the highest interest rate first. After your credit cards are paid off, you can then tackle other debts like your car loan, your student loans, and more.

The Power of Momentum

Keep in mind that by paying down more of the outstanding balance that is owed each month, you pay less the following month in interest. The process of paying this debt down does increase with time. You will notice that as you pay your outstanding balances down, your minimum monthly payment on your credit card accounts decrease. However, you do want to keep your payments the same rather than decrease them. By doing this, you will notice that more and more of your outstanding debt is paid off each month. Further, once one account is paid off, take the money you had been applying to the monthly payments on that account and put that money towards paying off your next debt. It can be slow and even rather frustrating to start paying down debts, but you will find that over time the momentum builds. By following these steps, the process of paying of your credit cards and even other outstanding debts will be faster and easier for you to accomplish.

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10 Steps to Overcoming Credit Card Debt

If you are struggling with credit card debt, you should understand that there is a process that you will go through in order to finally pay off that debt. Willingness to go through this process will help you undo the debt problem you have caused for yourself.

1. Realize That The Debt Is Your Fault

No one forces you to get into debt, so you have to understand that it is up to you to buckle down and pay it off. Blaming others will not help.

2. Find Ways To Pay Off The Debt Faster

Don’t waste money on things you don’t need. If you need to go out a few times a month, make some extra money first. Otherwise, just pay off your debt with extra cash.

debt problems

3. Don’t Tap Into Equity

Don’t take a loan to pay off your credit card debt. Keep your equity in your home and work harder to pay off your credit debt.

4. Sell Off Investments First

If you have stocks, or mutual funds, try to make a profit off those and pay down your debts. Investments aren’t valuable if you have too much debt.

5. Pay Off The Lowest Balances First

Find the card with the lowest balance and pay that off first. This reduces the amount of payments you have to make and the interest you are paying each month.

6. Make Small Payments

No matter if you have a couple dollars left over at the end of the day, you should make a payment. A dollar a day equals 365 dollars a year.

7. Cut Up the Cards

Cut up your cards and make sure you cannot use them. It is hard to rack up debts when you don’t have a card.

8. Work from Home

Get a second source of income. Whether it be a work at home job, or a part-time job, to gather a second source of money.

9. Budget

Make a budget so you don’t ever get into debt again. Getting out of your debt problems is not going to be a successful endeavor if you face the same problem over again.

10. Bankruptcy

If there are no other options available to you, it might be worth going bankrupt. You may still have to pay off your debts, but there is a chance that the whole thing goes away. That might be what you need now.

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