Thanks to being laid off, medical emergencies, or needed household repairs, credit card debt can quickly mount up and become a problem. Many people don’t intend to get into debt, but the circumstances of life just end up putting people there anyway. If that sounds like you, then here are some helpful tips to help you manage your debt effectively and eliminate it quickly.
Tip #1: Pay more than the minimum amount due whenever possible.
What causes people to stay in credit card debt are the interest payments charged monthly. If you just pay the minimum amount that is due, you’re often paying less than 0.1% off your overall debt principal, paying only the interest charges on your debt. The more you can pay each month without financial risk, then the more will apply to your principal balance and you’ll be out of debt that much sooner.
Tip #2: Use the snowball payment method of debt management.
If you are managing multiple credit card debts, then consider using the snowball method of payment. Take the credit card that has the highest APR on it, pay the minimum payments on all the other accounts you have, and then apply the rest of the money toward this high interest debt. Continue doing this until all of your credit card debt is paid off.
Tip #3: Consider using a balance transfer.
Balance transfers between credit cards can help you save upwards of 20 APR points on your debt for an extended period of time. That’s money saved that you could use to pay down your debt principal instead of paying interest!
Tip #4: Bankruptcy is always an option.
The problem that most people face with bankruptcy is the negative stigma that is attached with it. Although a bankruptcy can cause your credit score to drop over 200 points, it can also wipe away many of your unsecured debts, which includes credit card debt. A bankruptcy may put other possessions at risk, including your vehicle, so consult with a legal professional before finalizing any decision that involves this form of debt management.
Tip #5: Always expect the unexpected.
Before paying off any debt, make sure you pay yourself first. Emergencies happen when they are the least expected and having to pay for an emergency on credit is one of the fastest ways to get into debt. Put some money into savings first before you pay off your credit cards and other debts each month. Before you know it, you may just have enough to take care of that car repair AND pay off some debts in full!
Tip #6: Be vigilant about non-essential purchases.
One of the best ways to manage your credit card debt is to change your spending habits. Before purchasing an item on credit, determine if it is an essential item. Food, shelter, some clothing, and transportation to work are all considered essentials, but there are even non-essential luxuries in each category as well. By controlling your credit spending to just the essential items you need for income generation, you might be a little uncomfortable for awhile, but you’ll be well on your way toward becoming debt free!
Credit card debt can be controlled. The journey of a thousand miles begins when you make the choice to manage your credit card debt. Use these tips today to get a handle on your debt so that tomorrow your financial future can be strong!