Credit card debt can be one of the most difficult issues to tackle, especially if you feel that the amount of money owed keeps rising month after month. It can also feel like something that cannot be brought down due to the high level of interest rates that are added to the monthly debt.
This is a huge problem that has plagued the USA, with the average debt owed by each person being a staggering $6,200 a year.Nonetheless, there are ways to bring down or deal with credit card debt. Whether you owe money or you simply want to learn about good fiscal responsibility, this guide has been created to give you an overview of how to deal with credit card debt. Read on below to learn more.
Track Your Spending
The first point of order is to create a spreadsheet of all your spendingand compare the difference between your in-goings and outgoings. You can also track your spending through a mobile banking app. The advantage of doing this is it makes sure that you have control over your spending, giving you a far better mental approach to fighting debt. This way, you can see how much money is left over each month, thus allowing you to put your surplus money towards paying off the debt. A hardline approach to this is essential, meaning that you should:
Focus Only on Essentials
If the debt is too high, it makes sense to have an honest conversation with yourself about your spending. If you are having too many takeaway meals or coffees-to-go, with the average American spending $3,000 a year on food outside of the house, then these should be the first items to strike off your spending. Additionally, although it might be a difficult decision, cut down on any upcoming holidays or trips until the credit card debt is completely paid off. You can also see if you can cook more with less, as grocery trips may be one of your biggest spendings.
Pay the Smallest Debts First
Also known as the snowball method, focusing on the smallest debts first can allow you to slowly tick off the debts one by one, eventually making the debt more manageable. This is smarter than attempting the most expensive debt first, as it is easier to pay that off when the other debts have been scaled down. Nonetheless, if you do manage to comeinto a large windfall, then you can use that large payment to attack the biggest debt instead!
Get a Second Job
One way to make more money and therefore be able to take on your credit card debt is to take on a second job. Try and see if you can work extra on weekends or evenings and find the extra cash to beat your outgoings. There's one issue at the heart of this endeavor, however, which is the real possibility of burnout. Make sure that you aren'tworking too much, or you might mentally collapse and eventually be unable to work at all.
Seek Professional Help
One scary part of an owing debt is the methods by which companies use to collect money that they are owed. If you find yourself at the mercy of debt collectors, then you may need to consult the services of a debt lawsuit speciality law firm. Additionally, you can lean on government help for ways to manage your debt or even declare bankruptcy if you believe that the money owed is simply unmanageable.
Consolidate Your Debt
Debt consolidation is a smart way to put all your eggs in one basket. This means that you only have to work on one single debt as opposed to dealing with multiple different debts at the same time. This can be achieved by putting all your debts together in one place and then asking for a debt consolidation loan, which you can even get with bad credit.
Talk to Your Card Issuer
Credit card issuers may sound like evil and uncaring forces, but at the heart of their companies are still people who can be reasoned with. If you haven't already, try calling up the customer service bureau of these credit card companies in order to ask if they can reduce the interest rates on their loan. You might be surprised by how much slack they might be willing to give you. This will only work, however, if you:
Keep Up With Your Payments
No matter what, it's essential to keep up with your credit card payments. This is because you don't want to sink further into more debt as you miss further payments. While it may be hard to meet those payments month upon month, it's important to try and do everything you can to meet those payments every time; otherwise, the debt will only keep on rising.
Use Other Cards to Pay off Higher Interest Rates
It might seem counter-intuitive to get another credit card if you are already in debt, but this can be a smart approach if the interest rates on your cards are making it impossible to pay them off. Look for a credit card that has a lower interest rate, then use that card to pay off the one with the higher interest rate. The debt will still be there, but it will be more manageable and less expensive to eventually pay off.
Ask for a Personal Loan
If your credit rating isn't too battered, it might make sense to go to the bank and ask for a personal loan to help pay off your debt. This is a good idea for paying the debt off as the interest rate from a standard bank loan is going to be a lot less than the interest from credit cards. If the banks are not interested in giving you money to pay off your debt, then perhaps it's worth leaning on the efforts of friends and family. As they are your closest allies, they shouldn't charge any interest rates at all, making it easier to pay them back.