The effects of credit card debt are undoubtedly daunting, but they're not inevitable. Several strategies might help mitigate this financial burden.Consolidate Your Debt
Consider debt consolidation, which involves taking out a new loan to pay off your credit card balances. The goal is to secure a lower interest rate on the loan than you were paying on your cards, reducing your total interest payments and making your debt easier to manage.
Of course, debt consolidation is a potentially complex beast. If your debt feels unmanageable, seek help from a credit counseling agency such as Gauss
to make sure you’re doing the right things to secure your financial future. Expertise in finance is hard to find, so a reputable consultant saves you a lot of money in the long run.Prioritize Payments
To tackle credit card debt, prioritize your payments. Start with the card that has the highest interest rate. While making minimum payments on your other cards, funnel any extra funds towards paying off the high-interest card. Once paid off, move to the card with the next highest rate. This 'avalanche' method saves on interest over time.
In addition, don’t even think about spending money on anything frivolous. If something doesn’t need to be paid right this second, then it can wait. Being free of debt makes buying things in the future a lot less stress-free. If nothing else, you’re building up good buying habits. Budget and Plan
Implement a realistic budget that accounts for your income, essential expenses, and debt repayment. Stick to this budget and resist the temptation to make unnecessary purchases. As you free up more income, dedicate it towards your debt payments. Don’t break from this pattern even after you’ve paid off all your debt.
Instead, put the money you would have put towards the now-fulfilled debt payment towards a savings account. This is now your safety net. Debt is often the cause of not looking far enough in the future. A safety net guarantees your quality of life doesn’t suffer too long from a period of debt payment.Avoid Credit Cards
It may seem like something obvious in hindsight, but it still bears mentioning. Even after your debt is paid off, avoid using credit cards for the time being. Instead, pay for things only with the finances you have on hand. It’s important to build these habits before even attempting to restart the usage of credit cards.
Once these habits are formed, that’s when you consult a financial expert on the wisdom of going back to credit cards again.