Credit card debt is quite common in America, but don’t be misled into thinking it’s acceptable to accumulate debt amounting to thousands of dollars on a plastic card. While credit cards can aid in credit building, they can also accrue substantial interest over time. Here are a few tips to tackle your credit card debt permanently.
1. Cease Card Usage: Although challenging, this step is imperative! If you continue to use your card while already heavily in debt, it will only deepen your financial hole. If necessary, cut up your card. You can always apply for a new one once your debt situation is manageable. In case of an emergency? Consider creating an emergency fund of around $1000, an idea proposed by Dave Ramsey, as a more dependable alternative to your credit card.
2. Review Your Statement: Ensuring all charges on your statement are accurate is essential. Then, identify any charges that you can reverse. A $50 credit from a $5000 debt may seem trivial, but it’s a step in the right direction towards clearing your debt.
3. Trim Your Expenditure: Analyze your weekly expenses. Do you indulge in a $5 Starbucks coffee or fast food for your family costing $10 regularly? Or a $40-a-month nail treatment? Temporarily forgo these luxuries. Find an additional $25 from your weekly spending to apply towards your credit card debt and make modest payments over and above the minimum due. An extra $100 every month will hasten your debt clearance.
4. Generate Large Payments: Review your household items and identify those you don’t need and can sell. Put up expensive items for sale on platforms like eBay or Craigslist, and organize a garage sale for the rest. Most households possess unused items worth around $1000-3000. Although selling these might be time-consuming, it will provide a significant amount to put towards your debt. Alternatively, allocate a considerable portion of your tax refund towards debt clearance.
5. Clearing Multiple Card Debts: There’s ongoing debate about whether to target cards with high-interest rates or ones with lower total debt for repayment first. Some experts advise focusing on high-interest cards to save money while followers of Dave Ramsey suggest clearing smaller debts first to create a momentum. Either strategy can work, provided you commit to paying off one debt aggressively. Maintain minimum payments on all other cards and pay as much as possible towards the one card you’ve chosen to pay off first.
Handling credit card debt can be challenging, but freedom from debt is achievable. Stay motivated by reading about other individuals’ success stories of settling their debts.
