Feeling overwhelmed when engulfed in a sea of credit card debt isn’t uncommon, but breaking free may not seem like a tangible reality. Sure, an extreme fix could be shedding all your material possessions, stepping into a life of scarcity, and relocating to a distant Tibetan monastery, but let’s face it, your spouse and boss might not be on board. So, what’s a realistic solution? You have a few options that don’t require a complete lifestyle transformation. By following these five steps, you can reduce your debt without need for austere monastery commitments.
1. Leverage Technology: Missing a payment deadline affects your credit score negatively and increases your existing debt with added fees. With numerous free online tools and apps at your disposal, this shouldn’t occur. Establish automatic debits from your bank account, monitor your payments online or input reminders into your digital calendar. The focus here is maintaining consistent timely payments.
2. Evade the Retail Trap: Saving 15% on that laundry pair might seem appealing initially, but signing up for credit cards in retail stores damages more than it aids. These cards come with pretty high interest rates and late fees, burdening your financial health. The smartest course of action is to settle these debts, terminate the cards, and never look back. Listed here is an efficient debt-elimination approach to apply to all your cards. Each month, make the least payment on your low-interest cards and allocate a bit more on the cards with the highest interest rates. Before long, you will Slay the retail monster and stay clear permanently.
3. Speak Up to Score a Bargain: The simplest technique to reduce your interest rates? Just ask! As Bill Hazelton, founder of CreditCardAssist.com puts it, “This advice is so straightforward, people rarely consider it.” To decrease your credit card repayments and your total debt, try reaching out to your credit issuer or bank, and inquire about any possible reductions on your interest rates. Effective communication and a compelling argument might just get you what you need.
4. Resist Reward Drawbacks: Cash returns, gift cards, frequent flyer miles credit cards: these common incentives can tempt the most cautious spender into a financial pitfall. Resist this prevalent debt-accumulation trap. Generally, possessing a couple of credit cards suffices, so avoid signing up for additional ones. And when you need to charge a purchase, use the card with the least interest rate, not the most attractive rewards. To be candid, if you’re struggling with repayment to an extent of considering a second mortgage, a trip to Disneyland might not be on your priority list.
5. Freeze your Cards: Have you ever watched one of those melodramatic TV films where a luckless heiress is forced to tear up her credit cards in anguish? It’s a dramatic gesture that certainly curtails spending. But what about unforeseen expenses or family emergencies? There might be a less dramatic but equally effective alternative. Consider freezing your cards. Literally. Encase your cards in a block of ice, and you’ll have to thaw them before making any purchase. During this melting period, you’ll have some valuable time to examine your motivations. Is that the sound of your financial health improving or merely water droplets from the melting ice? Perhaps that discounted inflatable castle from Groupon isn’t a crucial purchase after all.
The principle of decreasing debt is fundamental: decrease your expenditure and increase repayments. Diehard debt combatants might contemplate selling all their belongings and adopting an austere lifestyle until debt-free, but that’s not a feasible strategy for most of us. Being a monk might have its perks, but let’s be realistic. The idea of abandoning Western comforts for a serene life atop a frosty mountain might come to mind. However, you might want to consider trying these simple tips instead. Remember, the Himalayas don’t provide HD flat-screen TVs.
Ben DeMeter provides insights on credit cards and personal finance at CreditCardAssist.com. His expertise has been showcased on Business Insider and a host of personal finance sites.
