Tips for Reducing Credit Card Debt
Do you stay awake at night stressing about how to pay credit card bills? Using credit cards as additional income to make consumer purchases may result in a temporary high, more often than not, the long term effects result in a financial hangover. Medical bills and car repairs are often unanticipated expenses that are paid for with credit cards. Whatever the scenario was that unfolded causing you to incur a mountain of credit card debt, know that you can eliminate this with careful planning, delayed gratification and loads of self-discipline. For any plan to succeed there must be a goal and defined steps to execute.
The first step is to create a spreadsheet listing all of your credit card balances and minimum payments in ascending or from smallest balance to largest. You now have a very clear picture of your credit card balances and monthly commitments. Take advantage of the deals offered by Groupon coupons and consider setting up monthly payments through the programs offered by Western Union. More often than not, paying the minimum required payment is like taking a piece of sand from the beach – you’ll be paying into infinity. The second step is to itemize your monthly fixed expenses including rent or mortgage, utilities, insurance, car or student loan payments as well as cable and internet costs. Add your monthly fixed costs and the total of minimum credit payments on credit card balances. Identify your monthly net/take home pay. Subtract the total of credit card payments and fixed monthly expenses from your take-home pay. This resulting sum is your monthly discretionary spending. It is from this sum that you will pay off your credit card debt.
This may seem daunting, but there are actually many options. The first is to refrain from accumulating any additional credit card debt. Lunch with coworkers and morning designer coffee can actually add up to over $3,000 annually. Look at your smaller discretionary spending amounts and annualize them. Suddenly, they become very relevant. Plan to pay off the credit cards with the smallest balances first. You’ll see progress and stay motivated.
Another option for faster reduction of credit card balances is to secure a part time job. Earmark all of the earnings from the job to credit card payments. This will require sacrifice and self-discipline. Keep your eye on the goal and realize you’re making wise financial decisions and developing responsible financial habits. The debt accumulation most likely did not happen overnight and will likely needs months or years to eliminate. Best of luck to you!