Your credit card debt is weighing on you, and you’re tired of dealing with it. You’ve decided that you’re finally going to get rid of it!
Before you start making payments, you should read these three tips that will help you reach this goal:
1. Don’t Overdo It
Yes, you want to eliminate your credit card debt as soon as possible, but trying to eliminate it too quickly can actually put you into more financial trouble. It’s good to dedicate as much as you can to your debt repayment, but you shouldn’t put all of your monthly savings onto your credit card. This can put you in a vulnerable spot! What if you have an emergency that you need to pay for?
If you do go overboard and you don’t have the savings to cover the expense, you have a couple of options. You could put the expense on your credit card—this depends on how close you are to reaching your limit.The movewill also undermine your goal of tackling your credit card debt.
Another option is to apply for a personal loan to cover the costs. Look at the most common types of personal loans to see which type would work best for you. It could be a useful alternative for handling emergency expenses.
You can avoid this tricky situation entirely by looking through your budget to see how much you can reasonably afford to put toward your credit card debt every month.
2. Make a Strategy
If you’re like most Americans, you have more than one credit card carrying a balance. The average American has four credit cards sitting in their wallet. That’s a lot of cards!
So, how do you handle your credit card debt when it’s spread across multiple cards with different balances and interest rates? You can use a payment strategy. These are two popular options:
- The snowball method
- The avalanche method
The snowball method is when you focus on the credit card with the smallest balance while making the minimum payments for your other cards. This method is praised for being simple and accessible for people who are intimidated by their debt and unsure where to even start.
The avalanche method is the opposite of the snowball method! You prioritize the credit card that has the largest balance on it while making the minimum payments on your other cards. This minimizes the amount of interest you will pay — particularly on the card with the biggest balance. The method is ideal for people who just want to get out of debt in a hurry.
3. Get to the Root of Your Debt
It’s possible that your credit card debt is pointing to an underlying financial problem. You will want to get to the root of that problem as soon as possible — otherwise, you might wind up in the same position all over again. You don’t want to only get rid of the credit card debt now. You want to stay out of it in the future!
You should look into the reason why you think you’ve acquired so much debt. Are you an emotional spender that shops online when you need to relieve stress or cheer up after a hard day? Have you been spending without any budgetary restraints? Are you living well beyond your means?
It’s not enough to pay down your debt! You should strive to be debt-free and financially stable.