Tackling Credit Card Debt
Posted on January 17, 2018 by admin in
It’s no secret that with ringing in the New Year comes a seemingly large credit card bill from the holiday season. Perhaps you’re someone who usually doesn’t carry a balance on their credit card, or it was never your intention to use your card as a way to bridge your financial gap, but here you are. For some reason or another, you have an outstanding balance on your credit card that you won’t be able to pay off on the statement date… hey, life happens. The New Year is a perfect time for you to empower yourself financially and pay down your credit card debt, especially because it can be costing you upwards of 20% in interest charges. I always ask myself if I’d be willing to spend 20% more on something I could buy at retail price, and if the answer is no, then I know I need to make sure I do everything in my power to pay off that balance as fast as I possibly can. Credit card debt can seem daunting, especially if you have a hefty balance that you’ve accrued! But fear not, 2018 is your year financially and we’ve curated seven tips to help you pay down that balance and get out of debt!
- Be honest with yourself. First things first, you need to know exactly how much you owe, and what it’s costing you. List out your credit card debt from highest interest rate down to lowest. You typically want to tackle your highest interest debts first. After you’ve completed this it’s important that you’re honest with yourself as to why you ended up in credit card debt in the first place and steps you can take in the future to ensure this doesn’t happen again. Did an emergency come up? It’s time to start building an emergency fund. Are you mindlessly spending on things that don’t add value to your life? Re-evaluate what gives you joy and focus your spending there. Expensive social habits? Suggest a frugal alternative when hanging out with friends (drink specials can be your friend!). Regardless of the reason, understanding why is critical when it comes to getting your finances in order.
- Cut up your cards. Whatever it takes, you need to stop using the cards that got you into debt in the first place. Whether that means hiding them, physically cutting them up, or freezing them in a block of ice it doesn’t matter. Ensuring you don’t continue to increase your debt is the only way you’ll get to debt free.
- Ask for a lower interest rate. Most people don’t know that everything is negotiable. Yes, even your interest rates. Call your bank and ask for them to lower the interest rate on your credit card. They want you to pay back the balance you owe so it’s important to outline that this will help you pay back what you owe.
- Consider a balance transfer. There are a number of promotional offers out there that give consumers access to 0% for a specific period of time if they transfer their balance to this new credit card. This can be really great if you can ensure that you will pay off the balance during the promotional period. If you can’t they end up charging you a higher rate of interest on the entire balance. So be careful, do your research, and make sure you’ll be able to pay it off in time!
- Pay more than the minimum. If you’ve ever looked at how long it will take you to pay back your credit card paying only the minimum, chances are it’s a really really really long time. This allows the balance to be outstanding for a longer period of time which means they are charging you more interest. This ultimately means that your purchase is more expensive and could end up costing you double or triple the original price if it’s dragged out for a long period of time. The key here is to pay as much as you can to your debt each month so that you are paying as little interest as possible.
- Snowflake your debt! This concept suggests you make small extra payments towards your outstanding balance. If you earn a little bit of extra income in a week throw it at your debt to get rid of it sooner. Even $20 goes a long way when it’s happening over and over again. The small payments toward your debt are known as snowflaking, so snowflake away!
- Get a side hustle. A great way to pay down your debt faster is to earn extra income. Find something you can do to earn a little money on the side, maybe it’s starting an Etsy shop, writing online, or nannying for a few hours a week. Whatever it takes, get that debt paid off as fast as you can.
Once you’ve got your debt under control and you find yourself in a better place financially make sure you take some time to celebrate! This is definitely worth a bottle of bubbly. Celebrate your new found financial success and set yourself up for a wealth financial future.
Janine Rogan CPA, Finance Writer, Speaker & Tax Specialist