With the economy in the state it is in today, many people are trying to crawl their way out from under mounting financial debt from credit cards, mortgages, foreclosures, and many other financial issues. Getting your debt under control is not impossible, but it will take effort and persistence, and if you follow the five steps listed below, you will be on your way to becoming debt-free forever.
Pay More Than The Minimums
Don’t pay just the minimum on your credit cards each month. By paying the minimum balance alone, you are only stretching out your debt even further. To really get a handle on your credit card debt and lower those balances, you should make more than the minimum payments. A good rule of thumb if you can manage it is to pay double your minimum payments. For instance, if your minimum payment is $150 each month, pay $300. By doing this, you will be cutting down on the interest you are charged each month and you will be bringing that balance closer to zero much faster.
Transfer your higher interest rate credit card balances to the cards with the lowest interest rate. If you are not able to transfer your balances to other cards, then focus on the card with the highest interest rate and pay more on that card each month than you do on your other cards. For instance, if the minimum payment on that high interest rate card is $100, pay at least double that amount or even more if you can afford it, to get that card paid off quicker. If you can’t afford to make more than the minimum payment on all your cards each month, then just pay the minimum on all cards except that one with the highest interest rate. Once you get that card paid off, pick the next card with the highest interest rate and do the same to get it paid down. Then just repeat the process until you have paid all your cards down.
Use Your Savings
If you need to, you may consider using money from your savings to put towards paying down your credit card debt. While you may not want to use your savings to do this, the faster you can get out from under all those high interest rates and bring all those balances to zero, the more money you will save in the long run. If you have the money tied up in a college savings account, a CD or a retirement account, consider the possible penalties you may have to pay by withdrawing the money early.
Another option for those who want to get out of credit card debt is to consolidate your debt. If you are considering consolidating your debt, you want to make sure to not get into debt even deeper by doing this. Some debt consolidations may look great, but they will actually make the repayment period longer, which will cause you to may more interest over a longer period of time. Read the fine print. Debt consolidation can be an excellent choice in managing your debt, but you want to make sure it is actually going to help you get out of debt faster and not just prolong the debt that you’re already in.
Your last option, and one you should absolutely try to avoid if you can help it, is to file for bankruptcy. Think about all your other options before considering bankruptcy. Some people are in so much debt that bankruptcy is pretty much the only option that will work for them.