Are you struggling with debt and feeling overwhelmed? If so, you're not alone.
More consumers are looking for ways to get out of credit card debt. And with the cost of living also increasing, many of us are forced to spend money we don't have using Credit Cards or Buy Now Pay Later schemes just to stay afloat.
Beware of Rising Interest Rates
It is now more important than ever to face up to your debts. That's because those debts will continue to spiral out of control as interest rates keep rising, trapping millions more in the debt cycle. As of July 2022, the total Credit Card Debt in the US stood at $890 billion.
If you're still reading this, I want to congratulate you for facing up to your debts and taking back control of your finances.
Here are my 5 Steps To Get Out of Credit Card Debt
1. Stop Digging
The first step is to stop digging. By this I mean stop getting deeper in debt by continuing to spend money using your credit cards.
Take out your wallet or purse and remove your credit cards so you won't be tempted to use them. Cut them up if it makes you feel better.
2. Track Your Spending
Spending is easier than ever with a simple swipe of our contactless cards. With the cost of living increasing, it is now more important to keep track of where our money goes each month. To keep more of what you make, you need to know where it is going. Sounds simple, but very few people take the time to actually do this consistently.
I personally recommend online tools such as Mint or an online app such as iExpensit which allows me to track my spending easily. Don't forget to review your bank statements to identify any regular subscriptions or payments going out.
Once you have a clearer picture of where your money goes each month, you will be able to review your spending and cut back on unnecessary impulse purchases such as the daily latte.
3. Eliminate Unnecessary Spending
Once you know where your money goes each month, you can then cut back on unnecessary purchases or subscriptions (such as Netflix and Gym Memberships) redirecting any savings towards paying off debt.
4. Zero Interest Balance Transfer
Here is where a zero percent balance transfer credit card can help - if you follow these tips to using them.
These cards work by allowing you to pay no interest on a transferred credit card balance for a fixed period of time. Depending on the card provider, you may also pay a small fee on the balance transferred. You can get one of these cards with an interest-free period of up to 36 months. Your goal is then to use the interest-free period to pay off your card balance forever.
Before you apply for a new 0% interest credit card, it is important that you divide the new card debt by the number of months in the interest-free period. Then determine whether you have enough money available each month to repay the card balance in full. If your debts are too great, you may have to resort to transferring the remaining balance to another 0% interest card at the end of the interest-free period.
A word of warning though.
You can use shuffle your debts between 0% interest cards twice before it starts to damage your credit score.
Work these cards right, and you could become credit card debt free....for free.
5. Pay More Than the Minimum Payment
Paying your credit cards on time will ensure you avoid late fees and damage to your credit score. It is in your interest to pay more than the minimum payment each month, even if it is only by a few dollars. That way you will save yourself interest and be able to repay the balance sooner.
In Summary
I recommend you start today by putting the 5 Steps into action. You will feel in control and more confident about your future. If you need help building momentum and improving your finances, you can also join our Money Mastery Program.
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