There is an old adage that says, “the only constant in life is change.” While this is certainly true, a more appropriate saying for our day and age is “the only constant in life is debt.”
First and foremost, credit card debt is not an indication of failure or the inability to rescue yourself out of a hole--the most important part of dealing with credit card debt is to keep a level head, keep your emotions in check, and to tackle the debt piece by piece.
When dismantling a car, a mechanic will not look at the whole vehicle and get overwhelmed; instead, he will start with the tires, then the doors, then the engine, then the seats, etc.
Although the total amount of debt may be scary, the most important takeaway from this article is to chip it off piece by piece, keep your emotions under control, and approach your strategies for paying it off in a realistic way.
Here are some tips to pay off your credit card bill. The best method is to pay off the entire balance, but here are some credit card debt relief tips if that is not possible.
Separate Your Card From You
Credit cards allow you to spend beyond your means. While this is sometimes necessary, it can also enable you to make some lifestyle choices that go beyond your income and spending capabilities, because you will then have to pay it off with interest.
If you are an easy spender, a good idea can be to leave your credit card at home. That way, you will be forced to pay with your cash on hand or your debit card, which both have fixed amounts that are actual dollars that you fully own, as opposed to credit card amounts that are not yours.
By being forced to pay with your accounts (or to not make the purchase at all), you can have a better idea of how much money you actually have, and you can instead direct your payments to reduce your credit card debt, instead of adding to it.
Reduce Lateral Debt
If you own multiple credit cards and have debt on all of them, try to do some crowd control over the streams of debt.
Imagine multiple pipes leaking water--you will cover one pipe at a time instead of trying to cover all three at the same time.
If you own 3 credit cards for example, pay the minimum amount for 2 (so that you don’t miss a payment), but pay more on the third.
Eventually, you will eliminate the debt for 1 out of 3 cards.
Do the same strategy for card 2, and then you will only be left with one credit card to worry about, instead of 3. If all goes well, you will pay off the last card, allowing you to “start fresh” and rethink your spending strategies.
This is a great way to not only limit your debt to only one credit credit, but you will also be exercising spending habits at the same time.
Pay Off The Lowest Balance First
Similar to how in a to do list, you would complete the smallest task first, this is the same principle for credit cards.
By paying off the lowest balance first, you can avoid another stream of interest payments, and you can better prepare for the next cards or bills.
Pay More Than The Minimum
Depending on your financial institution, your interest rate may be hurting you more than the debt itself. While paying the minimum amount is attractive because of how much money will be left over for you, it may not be the wisest decision long term.
If you pay more than the minimum amount, you will actually be paying less interest overall. Eventually, your smaller balance will lead to less interest payments overall. It works both ways: larger payments toward your balance have less interest, a lower balance in return will charge less for interest.
Rethink Your Budget
With a spreadsheet (or pen and paper) write down all of your debts.
This serves two purposes: you can track down your spending habits to re-evaluate your purchases, and you can separate your budget from your extra spending.
Calculate your mandatory expenses like car payments, mortgages, groceries, children, etc, and then subtract that from your income.
The money that is left over is all of your extra spending.
Take some time to cut out those extra expenses while you reduce your debt amounts. You cannot cut out the mandatory expenses, but you can take a break from the other spending while you manage your debt first.
Consolidate And Conquer
Combine your debt from multiple sources into one with potentially a lower interest rate. Mentally, you can worry about one large debt amount instead of multiple smaller ones, which has proven to have a better result in terms of paying it off.
Doing this results in a better image of your spending vs saving. You can better track your budget and take better caution before adding up to the existing debt.
Debt is a regular occurrence in our lives, and dealing with it can be a very emotional time. With a level head and a realistic approach to tackling your debt, these tips for paying off credit card debt can help you in the long run.