Proven Steps to Get Your Credit Cards Paid Off
I know it might feel like it but getting out of credit card debt is not out of reach. You can do this and I’ll show you how. There is a lot to know about debt and about yourself if you want to live a debt-free lifestyle. It’s a journey that extends far beyond your current financial stress. But there are a few simple steps you can start following today that, if followed, will eventually lead to freedom from credit card debt, however bad it might be. Follow this simple guide on how to get out of credit card debt and stay focused on the results.
As you go through these steps, you will find that there is continual room for improvement in balancing your budget. For example, you may reduce your grocery bill, but as your focus on saving money develops, you will continue to find even more ways to cut that cost. So, be active as you assess your spending and pay off your credit card debt. It will help you reach your goals even faster.
If you are living on credit cards and want to get out of debt, you will need to break the cycle. Look at where you are spending money you don’t have on things you don’t need. You can even make some money back from things you already bought by selling them to somebody else or returning them to the store. While you get yourself out of debt, it’s crucial that you commit to only spending money on the things you need and that you cut back or eliminate everything else.
Develop a Balanced Budget
Once you’ve committed to getting yourself out of credit card debt, the next step is to balance your budget. That means going over your monthly statements and tracking how much goes in and how much goes out. If more money goes out than comes in, you will never get out of debt. What you need to do is study all of your expenses and look for ways to increase the amount of money you are left with at the end of the month. You can do this by changing service providers or negotiating prices, and canceling monthly subscriptions. This is also where you will see all of the discretionary spending and what it adds up to.
Create a Debt Hit List
If you have only one card with a balance, start paying off the debt with the extra money you’ve set aside after balancing your budget. If you have multiple credit cards to pay off, simply prioritize one and aggressively pay it down to zero, then move on to the next credit card. While you are doing this, you will need to continue paying the minimum balances on all the cards and put extra money into the card payment at the top of your list.
The way you prioritize your debt hit list is very important. Target the credit card balance with the highest interest payment first. It will go down slowly in the beginning because of the interest that gets added to the balance, but as you bring the balance down, the interest will become less and the debt will be easier to pay off. Once that balance is zero. Roll that payment over and start paying off the next card.
Pro Tip: Find out exactly how to make your own Debt Hit List in my book, The Spender’s Guide to Debt-Free Living.
Monitor Your Progress
Keep track of your progress as you go. Watching your balances get paid down is a great motivator and it helps you successfully cut back on your spending when you are focused on the results of that commitment. In addition to watching your balances go down, many banks will now let you see your up to date credit score. Credit scores are an indication of creditworthiness and it’s good to have a high score. Although you should avoid taking loans or going into more debt while paying off your credit cards, credit scores are a convenient way to monitor progress and stay motivated. However, the best way is to keep looking at your statements and balances.
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