If you have credit card debt, it probably won’t surprise you to learn that Americans owe a whopping $986 billion on credit cards.
If you’re part of this group, tired of the monthly grind of payments, and wasting money on interest, you might be ready to tackle your debt problem.
The problem is that it can feel daunting to get out of debt, especially if you have a lot of it.
If you’re overwhelmed and don’t know where to start, this guide is for you. Read on to learn how to get out of debt.
If your goal is to pay off debt, then the first thing you can do is stop using your credit cards and borrowing money.
Even if you don’t quite have a debt payoff plan in place, by continuing to use your credit cards, you’re only adding to the problem.
Every time you use a credit card for a purchase, you borrow money and pay interest on that loan.
Before solidifying a plan for paying off debt, you need to know how much money you have available or can make available.
You also need to know where all your money goes. If you’re like many people, you are often surprised at how fast your paycheck disappears.
Account for every penny of your money. Start by tracking your spending. It should help to give you a real insight into where you can trim and come up with cash to put toward your debt.
After tracking your spending and accounting for your money, it’s time to sit down and make a budget.
First, you need to calculate all income you consistently have each month.
Then list your expenses and bills. Including all required expenses is important, or your budget isn’t accurate. Some people forget to account for things like putting gas in your car or bills you only pay quarterly.
Once you have yourself on a budget and have stopped all unnecessary spending, then you can make a plan for paying off debt.
Consider how much money you have that doesn’t go for necessary spending. Many people find it helpful to chart how they will pay down their debts.
Many experts suggest the snowball method. Continue paying your minimums for all debt except one bill.
Take all the extra money and put it towards one bill until it’s paid off. Then choose the next card to get paid off and follow the same plan.
If you need fast money, you may need to consider a side hustle to get more money into your budget.
If you don’t have the option to work more hours for overtime, you get another job and squeeze in hours on the side.
Don’t look at this as having more money. Instead, all income from your side hustle must go toward your debt.
Another strategy to get out of debt is to pay more than just the minimum due.
Looking closely at your credit card statements shows how long it takes to pay off a debt when paying only the minimum due. It also shows how much interest you’ll pay in the process.
When you pay more than the minimum due or make extra payments, that debt can be eliminated much more quickly, and you don’t spend as much on interest.
Some people who hope to get out of debt will consider a balance transfer from one credit card to another, hoping to save on interest.
A balance transfer might be wise if you get a temporary window where no interest is charged, and you can pay off the balance during that time.
It might not make sense if you simply move the money and continue to pay more interest.
One way to get debt help is to attempt to negotiate with your credit card company.
This falls under the category of it never hurts to ask. Call your credit card companies and ask if they can do better on your interest rate. If you’ve consistently made regular payments, they might consider it.
If they say no, you can also ask for fees to be waived.
If you have savings and can pay a lump sum, many credit card companies will take a smaller payoff if you pay in one large sum. Ask what they can do for a payoff settlement.
This suggestion might come as a surprise when you hear over and over about the importance of investing for the future.
You might consider not investing temporarily and instead use the money toward debt.
This is a smart, temporary solution if your investments don’t produce more income than what you’re paying out in interest.
It’s so easy to get into debt. You want something new. Your friends want you to go out for drinks or dinner.
You are ultimately responsible for your debt and how you got it. The same is true for getting out of it.
There are no real shortcuts to paying off debt. You have to spend less and hold yourself accountable.
Practicing self-discipline, especially over a long period, can be challenging. It’s important to remember what motivated you to work towards debt relief in the first place.
Remember why you want to be debt free and what goals you have associated with it. Remind yourself of them whenever you feel tempted to spend when you shouldn’t.
For some people, saving for something like a house or a big trip is why. Others find it helpful to recognize how much money they spend on interest and how that money could be used for other, more important things.
Another way to get some fast cash towards your debts is to sell some things.
The internet and social media pages make selling your unwanted items pretty simple.
Take a look around your house. What do you have stuffed in closets or the garage that you don’t need or want anymore?
Put a reasonable price on it, sell it, and put all the money towards your debts.
Some people feel like they can practice more discipline and feel more accomplished when they roll their debts into one monthly bill.
You might apply for a loan to consolidate your credit card debt. Be sure to research a personal loan with a better rate than what you pay on your credit cards.
Again, if you can pay more than what’s due each month, you’ll eliminate the debt more quickly.
Also, once you pay off those credit cards with the consolidation loan, cutting them up is important so you’re not tempted to use them.
You can be committed to eliminating debt, but if the people in your household aren’t aligned with your goals, you could face some challenges.
If your spouse or partner adds income to your budget, you both must commit to the plan. If they still use credit cards or misspend discretionary money, it can derail the goal of eliminating debt.
Even if you don’t share a budget, they must support your goals. You don’t need them to encourage you to go out to eat or spend in ways that go against your goals.
You can establish goals for eliminating debt, but your spending habits have to match them.
You won’t get rid of debt faster if you continue to spend discretionary money that could go toward your debts.
You need to pay attention to your spending and ensure it aligns with your goals for paying off your debt.
Another important tactic is to look for ways to spend less in your budget. The more you can eliminate in your spending, the more cash you have to throw at those credit card bills.
Consider cutting your spending by:
Take a look at your hobbies that might be costly. Do you need to take a break from an expensive hobby like golf or crafting to save money?
When you look at your debt, it might feel daunting. But it’s not impossible to get out of debt with a plan and some discipline. Use all or several strategies to help pay off your credit cards.
If you’re looking for a personal loan to consolidate debt, we can help. Apply for a loan today to use the cash and eliminate your unwanted credit card debt.