With the major holidays finally over, you may be wondering how you’re going to get rid of all of your debt without paying a small fortune in interest. Credit card debt can be a huge pain to knock out, especially when you’re already on a tight budget, but there are ways to help you become debt free in less time than you’d expect. This will not only help with your budget, but will also improve your credit. Best of all, each of the ten tips should be stress free so you won’t have finances on your mind all of the time. So, get ready to buckle down and let your credit card bills disappear faster than you thought possible.
1. Say No to Minimum Payment
No matter what your debt is, you’re going to get a bill each month that shows you the minimum amount of money you can pay on your balance. This number is usually surprisingly low, but this is done so that more and more interest can build up on your account. Although you should never not pay your minimum payment, you should also always try to pay a bit extra. You can put as much money on your credit card as you please, so if the debt is high then you may want to tighten your belt and simply pay as much as you can afford to help knock down the debt. If you can’t put a lot of extra on it then every little bit helps. Try rounding up to the dollar to add in a few cents extra, or simply throw on $5 whenever you can spare it. This will help cut back on the interest for good.
2. Set Aside Spare Cash
We often forget just how much money we lose when it comes to change. For a while, try to carry cash for your weekly spending money so you can put back more money for your debt. When the week is over, toss whatever spending money you have left in a jar. By the time you pay your credit card bill, you should have extra money to put on your bill, without ever having to save for it. This will help cut back on your interest immensely and will show you just how much money you’re throwing away on a daily basis. You might also consider putting your splurge money into a jar once a month, this will still allow you some luxuries but will also cushion your payment even more. Another way to set aside cash without forcing yourself to be too disciplined is to create a swear jar or bad habit jar. This will help you put back cash quickly and will improve your character.
3. Watch Interest
Interest is one of the worst things about credit cards because it increases the amount you have to pay back on your purchases. However, if you’re careful with interest then you can make your credit card work for you. For instance, if you plan on spending a lot of money on a card do it during a no interest period. Some companies will offer this when you open up your credit line with them. This will give you time to begin paying off the balance before interest kicks in for a larger sum of money. If you’re unhappy with your interest rate after some time then ask your credit card company for a reduction. If your credit has improved or you are a long term customer then they may consider doing this. If not, you may want to stop spending on this card and work on paying it off, rather than accruing more debt on that specific card.
4. Transfer Balance
Most people tend to have more than one credit card now, which is okay as long as you don’t build up too much debt on both cards. However, if you want to reduce your credit card debt then you might want to consider transferring your balance from one card to the other. This is especially great if you have a card that has a lower interest or no interest at all for a period of time. This will allow you to begin paying larger payments while you don’t have to worry about all of your money being eaten up my interest costs. Some cards will even offer incentives to convince you to do this, so you may end up getting a discount on the money you already owe. Of course, make sure you research to make sure this move will actually save you money in the long run. You should also make sure not to put more money on the card that you transfer your balance from. Instead, you may want to consider closing that account or putting the card in a safe place so you’re not tempted to spend with it.
5. Don’t Indulge
After charging lots of items for the holidays, you may want to take a brief hiatus from spending sprees until you get your balance under control. To do this, you may want to set some pretty strict rules for yourself. For instance, you may not want to put any charges on your card unless they are for an emergency. This will allow you to pay off the balance, rather than forcing you to fill like you’re making no progress at all. If you do have to use your credit card to pay bills, then you may want to consider only putting essential items on it when you absolutely have to. Don’t look at the credit card as a way to increase your flexibility between pay checks or to help make life easier. It may even help to place the card in water and freeze it, so you can’t have access to the numbers or physical card.
6. Stop Splurging
One problem many people face when paying off credit card debt is fighting the urge to buy more things. From shoes to fast food, spending money comes naturally especially if you put your debt to the back of your mind. However, if you’re serious about paying off your cards then you may want to put the splurging on hold for a while. This is especially true when it comes to using your credit card. However, you should avoid splurging with your debit card or cash too. This will allow you to hold onto more money that can quickly be placed onto your credit card. This extra bit of money will go towards the principle balance, rather than the interest. Before you know it, your lack of fast food trips will have done wonders on your credit card balance.
7. One Bill At A Time
A lot of people make the mistake of wanting to overdo it when they begin to pay off their debt. They will put excess money on each bill, which will end up getting them nowhere fast. One way to help ease the pain of paying off credit debt is to simply stick with the one bill at a time plan. This requires you to pay all of your bills, but allows you to put extra money on one of the credit cards. You can choose to do this on the lowest balance or perhaps the card with the most interest. Then, when you pay off the balance of that card you can move the payment you would put on it and put it on another bill. This will help keep things from getting overwhelming, so you can feel a lot more comfortable with managing debt while preventing yourself from creating more due to an over extended budget.
8. Consolidate
Another way many people choose to tackle their debt is to consolidate their bills. This usually happens when someone has too many bills to pay in proportion to their income. Consolidating debt allows you to pay one lump sum payment that will help knock out bills faster. Often consolidation companies will take on the debt, so you only have interest based on their plan. Consolidating bills can help cut back on monthly spending too and will allow you to rest easy because your debt won’t wind up with a collection agency. There’s lots of consolidation companies though, so do a little research to see which will work best for you before you enter into the consolidation process.
9. Set Goals
When it comes to working off your credit card debt, one of the best things you can do for yourself is to set goals. This will allow you to sit down and think about how much you would like to pay off in a specific amount of time. With a goal set, you’re more likely to follow through on your plan opposed to if you were just going to wing it. You don’t have to set extreme goals right away though. Instead, start small and offer yourself a small reward when you reach this goal. Then, move up your standards to pay off a bit more of the debt. Once you get into the routine of working towards your goal, it will seem like second nature to put more money onto the debt. This will also help you from getting overwhelmed by the debt, which is sure to bring more encouragement to your mission.
10. Earn Extra
At the end of the day, one of the best ways to cut down on your credit card debt is to bring more money into the home. This doesn’t mean you have to take on a second or third job to pay off your credit cards though. However, you could utilize your talents to help earn money. For instance, if you’re good at a craft then you could always try selling some of the items you make online. There are also craft fairs and conventions that make it easy for you to turn a profit with your items. Baking is another way to add to your funds, especially if you have a decent place to conduct a bake sale. Selling all of your old items might help out too, especially if you have quite a few clothes, antiques and toys that you don’t want anymore. Finally, you can always pick up a temporary job like an Uber driver or dog walker. This should help you earn more, so you can easily toss the extra money onto the debt.
More often than not, we tend to overspend during the holidays, which leaves us wondering what we were thinking later on in the year. These tips will help make the burden less stressful, so you can find financial freedom again and raise your confidence as a consumer.
