Research shows that Americans are loaded with credit-card debt. The average American household with at least one credit card has nearly $15,950 in credit-card debt (statistic from 2012). That’s a ton of debt! You can image the hefty interest rates and fees associated with this debt. Don’t fret if you have your own credit card debt. By following a few steps, you can be on your way to debt-free!
Start with a plan
The key is to know where you stand with your debt. How many cards do you have? What interest rates are they charging? Make sure you have all your calculations correct and devise a plan. You know what they say, “Failure to plan is planning to fail!”
Budget your finances
We discussed budgeting in one of our previous blog posts. Budgeting is essential for any household to run smoothly when it comes to finances and a major step in paying off any debt. A budget will fluctuate over time so be sure to update it as needed, especially as you begin to pay off your credit cards. Try to allot more money to pay down your debt.
Negotiate your rates
Try calling your creditors and ask for a lower interest rate. Even a small percentage difference from what you’re already paying can make a difference. It’s always worth a shot!
Time to get busy
First, list your debts smallest to largest- regardless of interest rates. Pay off the smallest bill first and only pay the minimum payment on all of your other bills. What we’re describing here is the “Debt Snowball” method by Dave Ramsey. If you love to read, pick up his book called “The Total Money Makeover Workbook” where he describes this in detail. This is a brilliant plan developed by Mr. Ramsey that is a fool-proof method to paying off those bills. Short on time? Check out this video instead: https://youtu.be/zZP9aflH7MY.
Focus on one card at a time
Credit card debt can seem overwhelming. Take it one step at a time and one card at a time! If all your interest rates are similar, just focus on the card with the smallest balance first to get it out of the way. Little steps are always better than no steps at all – especially when it comes to bettering your financial future.
Track your progress
It will be very rewarding when you pay off your debt! Each step of the way, track your progress and adjust your plan or budget as needed. Keep in mind that Rome wasn’t built in a day. It took time to rack up your debt – and it will take time to get rid of it! Set a reminder on your calendar or phone to do periodic checkups of your progress.