Credit card debt can be depressing and overwhelming. You may not have intended to get into credit card debt, but for some reason you are sitting on top of credit card debt and you have no idea what to do about it. In this post you will read the general steps you should take to get out of credit card debt. Keep in mind, the details within each step will vary from person to person. This is because all types of debt are not the same.
Below is a guidance about the best way to get out of credit card debt. Remember that this information will not guarantee success, but it might help direct you in the ideal direction.
1. Evaluate Your Debt
Your first step must be to evaluate your financial situation. Make a list of all of the debt that you currently have. This list should include a summary of the total debt and the yearly percentage rate (APR). Looking at every cards APR will help you determine the best way to approach your credit card debt.
2. Evaluate Your Spending
It is important to also make a list of all of your spending. Make a list of all of your fixed spending. This fixed spending should include mortgage payments, rent, utilities, and food to name a few. Then add to your list to all of your extracurricular spending (i.e. entertainment).
3. Create A budget
As soon as you have figured out your debts, it is time to create a budget. A budget can allow you to monitor your spending and make a good plan on how to shrink your credit card debt. Online tools like Mint and YNAB (You want a Budget) may be helpful in establishing a budget and ensuring that you don’t stray too much from it every month. Making a budget will guide you to lower your credit card debt.
4. Free Up Cash
You may want to explore ways to cut costs and create income. You can free up cash by making your coffee at home instead of making the daily Starbucks run . Or you can downgrade your cable or cancel your gym membership. It is smart to figure out what you can live without and cancel or downgrade those items. This way you will have more money to pay off your debt.
5. Create A Plan
The best way to pay off debt is by creating a plan on how you will do so. The avalanche strategy involves paying off the balances together with the maximum interest rates. This may not be feasible. The snowball process is a great way to pay off debt. You pick the card with the lowest balance and pay it off. Once that card is paid off you pick the card with the next lowest debt.
6. Search For Help
Trying to climb out of debt can be overwhelming. If you feel overwhelmed, it maybe time to see a credit counselling service. The specialist here can help you get on the right path to pay off your debt. Its always a great idea to find a counselling agency that provides services that are in-person. A lender is just another resource that available.
7. Stay Out Of Debt
Staying out of debt should not be difficult. The simple thing is to spend what you have and don’t spend what you don’t have (of course).