Finance

8 Steps: Get Rid of Credit Card Debt

8 Steps: Get Rid of Credit Card Debt

During financial uncertainty in this economy, it’s beneficial for you to have your finances in order. This also means that you need tackle down on your outstanding credit card debt. We’ve gathered you eight great ways to get rid your debt once and for all!

Stop using your credit card

Best way to start getting rid of your credit card debt is by getting rid of the good old credit card! Yes, that’s right, you heard us! Get rid of it by cutting it in half and throwing it away. If you’re not ready to permanently let go of your credit card, you can ask your partner to keep it safe and away from you for the time being. Or maybe you can take the next step and freeze your credit card like Rebecca Bloomwood (Isla Fisher) in the Confessions of a Shopaholic movie. Mantra this: No credit card, no expenses. It’s a no brainer.

Where do you stand?

It’s always important to figure out where you stand and what your financial situation is at that very moment. Make sure you know exactly how much debt you really have. So go on and get yourself a calculator, a pen and a paper and write everything down. Once you know where you are, it’s easier to go about planning your debt free lifestyle.

Get in touch with your credit card company

Now it’s time for you to get in touch with your credit card company and explain to them about your situation. Try to come up with a plan with them and negotiate a lower interest rate for your debt repayments.

Create a budget

Once you’ve come up with a plan on how to repay for your debt, it’s time to start creating a budget in order for you to succeed in paying back the debt successfully. First you need to examine your spending habits. Be brutally honest with yourself. Gather up your receipts and bank statements and check what you spend on that’s actually necessary and which aren’t. Most importantly check if you’re spending more than you earn.

Reduce your monthly bills

After establishing your monthly budget, you need to figure out if you need to reduce your monthly bills to be able to stick to your budget. So start by getting rid of the non-essentials, for example subscriptions. Get rid of magazine subscriptions, cable tv and downgrade your internet / mobile contact subscriptions to a cheaper one

Pay the highest interest rate first

When paying off your credit card debt, it’s best to first pay off the one with the highest interest rate. If you still have money left in your budget for that month, pay off the debts with the lower interest as well. Once the highest rate of debt is paid, pay the other lower interest debts off as much as you can, according to your budget.

Liquidate your assets

If things are starting to get bad or you have already ended up in a bit of a pickle, you can always start liquidating your assets. Start by selling the ones with the highest value For example get rid of your car, jewelry and unnecessary items such like clothes you’ve never wore. If you are unable to pay for your mortgage / rent you can always downgrade to a smaller and cheaper home.

Pay with cash

Lastly, it’s time to start monitoring your spending. The best way to do this is by using cash. Start using and paying your hard-earned money in cash. It’s much harder to spend money, when you can actually see the amount in your hand. You most probably will end up spending much less, than you though you would. By paying in cash, you’ll automatically only end up spending the amount you have on you during that month and this will lead to you not collecting more of a debt that you already have.

 

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