Get Rid of your Credit Card Debt
Credit card debt can feel like an anchor holding back your financial progress. It drags down your credit score and reduces your options in terms of housing, vehicle purchases and other items.
For those who have credit card debt, paying it down is the first step to true financial freedom and a brighter future. Here are nine key steps for finally getting free of card debt:
1. Stop Using Your Credit Cards
Resolve to stop adding to your mountain of debt. Take your cards out of your wallet and don’t travel with them. Pay with cash or debit card and don’t buy anything else on credit until you have paid off your existing debt. Freeze your credit cards in a block of ice to make them inaccessible; if you have to, cut up your credit cards so that you are not tempted to use them. (You can always request new ones from the credit card companies later once your debts have been paid off.)
Freeze your credit cards in a block of ice to make them inaccessible; if you have to, cut up your credit cards so that you are not tempted to use them.
2. Take An Honest Look at Your Spending
Do you really know how much you are spending? Take the time to analyze your financial output. Write it all down so you can see it in black and white. Determine where you went wrong financially and how you accumulated so much debt. Be honest with yourself; from here, you can make corrections so that you don’t make these mistakes again. Create a budget going forward that allows you to make progress on your credit card debt.
Do you really know how much you are spending? Take the time to analyze your financial output. Determining where you went wrong financially can help you create a budget and tackle your existing credit card debt. Click To Tweet3. Negotiate Lower Interest Rates
Call your credit card companies and ask them to cut your interest rate as much as possible. Many will be more than willing to do so, and it will help minimize additional costs being added to your debt.
4. Pay Off Cards with Higher Interest Rates and Lower Balances First
Higher interest rates add to the amount of debt you owe, so address these accounts first. Strive to pay off the cards with the least amount of debt first. This may seem counter-intuitive; however, having fewer accounts hanging over your head has a positive psychological effect that can inspire even faster progress.
5. Leave Your Retirement Accounts Alone
Some might be tempted to draw from their 401(k) or other retirement accounts to help pay down credit card debt. While this may have positive short term effects, it can only compound your situation and jeopardize your financial future during retirement.
6. Increase Your Cash Flow
Cash flow is key to paying down debt, so find ways to increase your personal revenue streams. Working more hours in your existing job is one way to do this; however, you might also consider getting an additional part time job or a higher-paying job. Sell valuable items you don’t use and consider subletting a room in your home to a renter.
7. Pause Excess Spending
Take a close look at your expenditures and see where you can make cuts with optional items. Skip the extravagant vacation this year and use that extra money to make big progress on your credit card debt.
8. Cook More, Eat Out Less
Going out to eat can add up dramatically, especially when drinks and tip are added. Resolve to eat out less often and plan meals from the grocery store. Make double or triple the amount so that you can freeze some for later.
9. Set Financial Goals
Without a vision to strive for, it can be more difficult to stay on track. Set goals related to when you would like to be out of debt and what will be possible once you are – such as a better credit score, which could allow you to buy a home or start a business.
Credit card debt can feel like a weight on your shoulders, but with focus and persistence, you can become debt-free. Use these nine steps to finally liberate yourself from credit card debt.
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