All Posts Tagged: best way to get out of credit card debt
What is the best way to get out of credit card debt?
Getting out of credit card debt is not an easy task, but it’s not impossible, and there is hope if you are feeling overwhelmed.
Being in denial of your credit card debt and choosing to ignore it will never make it go away. Chances are you’re already feeling bad about it, and it has added stress to your life. Debt will always be there unless you tackle it.
Well, congratulate yourself, because you’ve already taken the first step in finding the best way to get out of credit card debt by reading this article!
If you are feeling overwhelmed or ashamed of your credit card debt, don’t be. You may have incurred your credit card debt for a number of reasons; medical issues, a job layoff, not making enough money or you just lost sight of your spending. Whatever your reason is, it already happened, and you just have to move forward.
By taking the following steps, you will feel better about your credit card debt situation, and you will be on your way to financial wellness and freedom.
The Best Way To Get Out Of Credit Card Debt In 3 Steps
1. Create a budget
The most important part and the first thing to do on your research to find best way to get out of credit card debt. Without a budget, you won’t be able to get a handle on your finances. A budget forms a clear picture of your income vs. expenses. So, confront your budgeting fears and get on it ASAP!
Define how much you earn each month and how much you spend each month. Include all forms of income (side jobs, child support, rental income) as well as all three types of expenses in your budget: fixed (mortgage/rent/utilities), variable (food, gas, medications) and discretionary (entertainment, vacations, eating out).
It cannot be stressed enough to include the expenses that you may consider minor in your budget. Discretionary items are the easiest expense to make changes to as they are a want and not a need.
For example, if you go to your favorite coffee shop three times each week and spend $5 on a latte; you need to document that. At $15 per week that’s $60 per month. You’re spending $720 a year and maybe more on something that is a need.
By documenting and keeping track everything you are spending money on, you will be able to see where you need to make cuts. Once you know how much money you will save by making cuts on your wants, you can apply that amount toward paying down your credit card debt.
Make prioritizing part of your best way to get out of debt repertoire. Taking on all of your credit card debt at once could prove to be a daunting task, but don’t overwhelm yourself. While your strategy may be to pay off your smaller debts primarily, it’s best to focus on paying down the high-interest credit cards first as they are the ones that will cost you the most over time.
For example, paying $500 per month on a $5,000 credit card bill at 18% interest rate will save you more money than paying off a $500 credit card bill at a 6% interest rate.
Prioritizing on what discretionary items you’ll have to part with may be a little bit painful, but you must be prepared to make some sacrifices. Take into consideration scaling back on your cable bill and downgrade from premium to basic or brown-bag your lunch during the week.
3. Change your financial thinking
You might not think so, but changing the way you think about money is also probably the best way to get out of credit card debt. After budgeting and prioritizing and getting your credit card debt under control, the way you think about your finances will have an impact on your future financial health.
While it doesn’t sound like fun, paying down credit card debt and keeping your head in the right financial mindset doesn’t mean your life will be boring.
You just have to adjust your spending habits and find fun things to do that fits within your budget when looking for the best way to get out of credit card debt