 Does thinking about your credit card debt give you heartburn? Do you cringe when your statements arrive in the mail? Do you avoid looking at your credit report?
If so, it is time to take control. Stop being scared of your debts and start taking action. Credit.com has six painless tips to help you become debt-free:
1. Stop Spending
This is the most obvious and also the trickiest step for most people. Stop putting new charges on your credit cards. Leave them at home when you go shopping. Switch to cash and checks. Freeze your cards in a block of ice. Do whatever it takes to avoid adding to your debt balances.
You can work out a monthly spending plan to pinpoint places where you're losing money and to establish some goals. Use a free program like Mint.com to track your progress each month. Reward yourself when you reach milestones!
2. Stop Saving
If you're in serious debt, it can also be a good idea to cut back on your savings. It doesn't make financial sense for your vacation fund to earn 3% while your credit card debts cost you 19%. The catch is to make absolutely sure you put the savings amount toward your debts. Save it or use it to pay off your debts, but don't spend it.
3. Try DIY
See if you can work out a plan to become debt free on your own. Do the math. Using your spending plan from the first tip, calculate how much you can afford to pay toward your debts with each paycheck. Subtract each of your minimum debt payments from that amount. Put the leftover money toward the debt with the highest interest rate. It helps to dole out these checks right when you get paid, instead of waiting for whatever money is left at the end of the month.
4. Make More Money
This could be as simple as asking for a raise at work, taking on some overtime hours, or holding a garage sale. You can also try selling a few things on eBay or Craigslist. And if you're artistic, sites like Etsy.com can help you sell handmade goods. Every extra dollar helps when it comes to getting those debts paid off.
5. Consolidate
Consolidating your high APR debts onto a card with a low rate or into a personal loan could help you save on interest while you repay. The better your credit score is, the better the deal you can get on a new loan or card. This system only works if you don't add new charges to the accounts you consolidated and if you still work on paying the balance off quickly. Remember: There is no way to borrow yourself out of debt.
6. Get Professional Help
If you don't think you can pay off your debts on your own, request a free consultation with a debt counselor. These agencies have deals with the credit card companies that can help reduce the total amount you owe. Get a no-obligation quote from a debt counselor online.
The most important tip of all is to START TODAY! Your debt balances can start dropping tomorrow if you take action.
If you have questions about getting out of debt or want to share your own debt story, email us at tidbits@credit.com.
Quote of the Month
"You can only become truly accomplished at something you love. Don't make money your goal. Instead, pursue the things you love doing, and then do them so well that people can't take their eyes off you.”
- Maya Angelou
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