Amanda’s Note: This was provided by an online contact.
In many ways credit cards make the modern world go round. Without them contemporary life would not be nearly as convenient as it is, we’d have to carry large amounts of cash with us everywhere we went and we’d never be able to make that financial stretch to get the things we really want. On the other hand, like anything that provides instant gratification they lend themselves to being abused, or at least misused. As a result it doesn’t take long for an individual or family to amass a mountain of credit card debt that could wind up undermining their lifestyle and having a negative effect on their financial integrity for years to come.
Follow These Steps for Clearing Credit Card Debt Quickly and Effectively
If, like millions of people the world over, you find that you’ve lost control of your credit card debt don’t panic. Instead follow these tips to clear the debt and restore order to your finances.
- Put the cards down and step back from the table – The first rule of problem solving is to stop doing things that make the problem worse. In the case of excessive credit card debt that means no more charging, which in turn means removing the cards from your wallet and either cutting them up or putting them somewhere like a safe deposit box where they’re not easy to get. Sure, you can still access a safe deposit box but doing so will require a special trip to the bank on your part. This will go a long way toward preventing impulse purchases. The wisest thing to do in most cases however is to simply cut them up and be done with it.
- Set goals – Once you’ve contained the problem by ditching the cards you can then set a goal for clearing the debt. It’s important to have an overall goal but it’s just as important that you build milestones into the process as they’ll help you demonstrate to yourself that you’re making actual progress. Mountains aren’t climbed by focusing on the summit. They’re climbed by focusing on getting to the next camp. Be a mountaineer. Be driven by the ultimate goal but focus on the milestones. It works.
- Cut expenses – Another essential component of any debt repayment plan is slashing your outgoings. This will serve the vital purpose of freeing up money you can put toward faster debt repayment. And the faster you tackle the debt the better off you’ll be. Look into things like carpooling, turning down the thermostat by a couple of degrees in winter and turning up the settings on the AC in summer. Take a good look at your mobile phone, cable/satellite and internet contracts and eliminate any features you’re paying for but not using. Or better yet, find a single, cost-effective package for all your digital needs.
- Worst first – No doubt you have some credit cards that charge higher interest than others. These are the ones that are really killing you and should be the ones you prioritize paying off. Make the largest monthly payments on these cards that you possibly can while continuing to make minimal payments on the other cards. Once you’ve cleared these high interest debts you’ll experience a real sense of relief and rest easier knowing that the toughest part is behind you.
- Stay the course – It’s inevitable that at some point in the repayment process you’re going to be tempted to say “Good enough!” and resume your old ways. Don’t. Seeing the process through to completion is the only thing to do if you want to A) take full advantage of being debt free B) restore or even improve your credit score going forward and C) teach yourself valuable lessons about responsible financial management. Throw in the towel early and you won’t learn much and will likely be back in the same boat in the not-too-distant future.
Alternative Methods of Clearing Credit Card Debt
- Use Savings – Yes, savings are savings and not intended for the clearing of debt. But if you have significant savings using them to pay off your credit card debt can save you a lot of money in the long run. Remember your debt is likely accruing interest much faster than your savings. That means that even though you have savings your financial situation is going backwards and you are actually getting poorer as long as you carry the credit card debt. Using your savings to pay it down then will restore a solid foundation under your finances and stop this backward slide.
- Apply for a debt consolidation loan – Getting a loan to pay back debt may seem counterintuitive but a debt consolidation loan can ultimately prove a wise choice. With such a loan you’ll immediately clear all your credit card debt and have a single payment smaller than the total payments you were making before. The danger of such a loan is that you’ll be tempted by having cleared your credit card balances to go back to using your cards like before. If you do you’ll have the debt consolidation payment every month plus the new credit card payments. Not good.
- Borrow against equity – If you own your home and have substantial equity in it you can consider borrowing against that equity to pay off your credit card debt. You should not do such a thing lightly though as your home should never be viewed as an ATM. Also, never lose sight of the fact that the preferred way to pay off your credit card debt is to cut up the cards and make the largest monthly payments you can until the debt it cleared, rather than borrowing from Peter to pay Paul.
You’re Not Alone
Remember there’s a name for everything you’re going through because plenty of others have been through it before you. You’re not the first and you’re not alone. Take solace in the knowledge that paying off your credit cards is not an endless process and the more fully you commit to it the faster you’ll be back on track to a better future.