Do you want to pay off your credit card debt faster? I know your answer would be a big YES. I f you feel like you are buried under the credit card debt and want to be free from this kind of bad debt, start making goals now. You should start paying your credit card debt as soon as possible. This will not happen overnight and requires a lot of planning and determination.
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Paying credit card debt is a mounting task and it is not easy. But it can be done. If you will make a plan and start paying it off and stick to it, you will definitely be free from credit card debt.
Which debt repayment method to use?
- Avalanche or
- Debt snowball method
It is totally up to you how you want to tackle your bad debt. You just need to be consistent with your efforts. You can start by budgeting and earning more as a side income.
1. Change your mindset
The foremost thing you need is to change your mindset about using credit cards. If you will go on thinking that you can shop with your credit cards at any time and whenever you want, you will remain in debt. It is obvious that credit card debt is always very high-interest rate debt which means you have to be very careful about how to use your cards.
2. Totally stop using your credit cards
The next thing you should do is totally stop using credit cards. Stop keeping them in your wallet. Instead, keep them in a box and freeze them until you have cleared all your debt. This way you won’t be tempted to use your credit cards for the purchases when you don’t have money.
If possible, cancel your credit cards after paying all the debt. To eliminate debt, you should stop accumulating more debt. Pay cash for your basic necessities instead of using plastic.
3. Make goals for paying off debt
Now make relevant goals according to your debt and how much you can spare to pay off your debt.
As with anything else in life, you need SMART financial goals for paying off your debt. As you know SMART goals are Specific, Measurable, Achievable, Relevant and Timely.
Specific: Make your goals specific instead of giving a general statement. ” I will get out of debt ” is a very general statement, be specific about that. ” I want to get out of credit card debt ” and be more specific if you have more than one type of debt. I will pay off ( name the particular credit card ) first is more specific. This is a specific goal to pay off a particular credit card.
Measurable: ” What gets measured, gets managed”. Write down the particular amount you want to pay from the above credit card. That will be your measurable goal.
Achievable: For example, if you have a debt of 5000 dollars but you are left with only $100 each month, you cannot pay that amount in 2 or 3 months. Keep your goal achievable by making a certain amount of repayments each month or better, each week.
Relevant: Relevancy of goals is important and if you feel like paying off debt is not possible, generating more income could be a goal for you at this time, And then you may find that paying the debt is easy for you with increased income.
Timely: You would agree with me on this one that goals should be time-bound. Time-bound goals keep you determined because you have to accomplish the given goal in a given time. As of now, we are taking the example of eliminating the debt on this particular credit card. You cannot just write down, ” I will pay the debt on this credit card”, you will be paying a set amount of money in a set time. Say you will pay this in one year. Now this goal has a time limitation, it will be easy to figure out how much you need to pay in a single month to pay off this debt.
⭐Pro tip: Make goals and stick to them with a determined action plan
4. Cut your expenses
If you want to stay debt-free, cutting expenses will help you a lot. Spending money only on your basic needs will help you in sparing some money to pay off debt. Create an airtight budget which will help you in saving money which can be paid towards your credit card debt.
Do not plan any vacations and travel for now. Put each and every dollar towards your debt repayment.
5. Track your spending
At this point, your main goal should be to free some money to pay back this high-interest debt. If you can free even a few dollars each month, it would be helpful in paying off some of the money. Tracking your spending gives you some insights into your spending habits. When you know where your money is going, it becomes easy for you to cut your expenses.
Any expense which is not a need could be controlled. You may feel like your outings and entertainment is reduced, but remember, it is for a shorter period of time. You will be able to enjoy your life fully when you have cleared all your bad debt.
6. Pay one type of debt first
Tackle one credit card debt first. If you will pay the smallest debt first, it will give you the motivation to attack next debt. And if you will pay the highest interest rate debt first, you will put a halt on fastest-growing debt.
Choosing any method to pay off your debt is a personal choice. Both the methods work. It just depends on your attitude towards money and what are your plans for eliminating the debt.
7. Consolidate your debt
Consolidation will combine you all debts at one place and it becomes easy to pay one debt instead of paying different instalments. Moreover, credit cards have a very high-interest rate, which makes it difficult to keep track of your payments.
Consolidating your debt at one place saves you from further debt as it also helps in lowering your interest rate.
8. look for any spare money
Look for the ways you can generate some money. You may have some items lying in your house which you don’t use, sell them and put that money towards debt repayment. If you have some savings or are saving money for a purchase or holidays, practice delaying the gratification and use that money to pay the debt.
I know what you may be thinking that what if you will need money for any emergency. But think about the interest rate you will be getting from banks and the interest rate you will be paying on credit cards. There is no sense in saving money and paying huge interest rates on credit cards.
9. Keep up with your repayment plan
Whichever way you are using to pay your credit card debt, just keep up with it because if you will not stay consistent in your repayment plans it will be difficult for you to keep up with your repayment goal. Just keep going and don’t stop.
10. Talk to your credit card companies/institutions
This could be one of the options if you want to pay your credit cards. Talk to your providers as they can help you in repayments. Credit card companies have a system in place if you are unable to pay your outstanding amount. In most cases, they will assess your situation and can help you by
- Reducing your repayment amount
- Reduce your interest rate for a period
- Give you some time to let you stand on your feet
For this, you need to talk to them about your hardship and your willingness to repay the debt. Credit card companies are more than happy to make some adjustments to get their money back.
11. Refinance your mortgage
Refinancing your mortgage can help you save some money. Even if you get a small reduction in interest rate, you can save some money each month. This saved money can go towards your debt repayment.
12. Stay motivated
One of the most important things to do is to stay motivated in whatever you are doing and keep on doing consistently. Sometimes it is so tempting to buy those things which you just want but don’t need. Keeping yourself motivated to stick to your goals will help you in progress towards being debt free.
How to stay debt-free after repaying all the bad debt?
After paying all the debts, your main goal should be to repay your mortgage. It cannot be paid in a very short span of time. It takes time and so makes a plan to repay your mortgage.
To remain debt-free ( from credit cards) you should make a solid plan.
1. Create an emergency fund
I assume that you used all of your funds in repaying the credit card debt. Now is the time to create an emergency fund for your future. You may need funds immediately for any medical emergency, or you may need to change your job.
2. Cancel your credit cards
If you know yourself and you may again get trapped in credit card debt, cancel all of them and totally stop using plastic. High-interest rates and annual fees can again accumulate as bad debt.
3. Create a strict budget
Create a budget and stick to it. Your financial condition does not depend on how much you earn rather it depends on how much you spend. If you will stick to your budget, it will keep your spending in control.
4. Make financial goals and accomplish them
As with any other area of life, you need to have some financial goals so that you will be on track with your financial situation.
If you are looking for increasing your income to pay off your debt, you can start by earning some extra income through surveys. I know you will not become rich but earning a few hundred dollars each month will help you reduce your debt faster.
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I like this survey site because they provide a huge amount of surveys. There is always a survey waiting to be completed. More survey opportunities mean more chances to earn points.
I hope this will help you reduce your credit card debt and grow your wealth in the long run.
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