So you want to stay out of credit card debt or you’re looking for relief from credit card debt. Want to eliminate debt? Consider the following tips and tricks for getting out of debt, and staying out.
Stop charging your credit cards. As someone wise said “The first step out of any hole is to stop digging”, and getting out of credit card debt is no exception. One of my very good friends got in to so much credit card debt, she had a discussion with her parents and husband and decided to get rid of all her credit cards. I’m not asking you to take such extreme measures, but ‘restrain’ is important whether you want to eliminate your financial debt or save money for your family’s future. May be you can keep one or two credit cards for a rainy day, and close all the other credit cards after consulting with your credit card company (or bank).
Keep credit card spending under control. If you don’t want to (or you can’t afford to) stop charging your credit card/s completely, you should try to limit your monthly spending to what you can afford to pay. Make a point to set aside a fixed amount of $ on your pay day for paying your credit card bill and make sure you don’t exceed that amount in your credit card spending. I know, it’s easy to say, sorry… but you’re trying to get out of debt and this is the way to do it.
Transfer balances to a low interest credit card from a high interest credit card. In the USA, the typical interest rate for credit cards is between 7 and 36%. In some other countries (e.g. Brazil), interest rates on credit cards can be as high as 240%. Yes, that sucks big time; be thankful if you’re in the US . Simply put, for every US$ 1000 of credit, you will pay $70 if your interest rate is 7% or $360 if your interest rate is 36% every year respectively. Now that’s a big difference. So if you have two credit cards, one with an interest rate of 7% and another with an interest rate of 20%, transfer the balance from the latter to the former and every month you will save $100s depending on what your debt is.
Make micro payments (aka snowflakes) whenever you get some extra money. It may be tempting to use whatever extra cash you get on entertainment. But if you are struggling to eliminate debt, you may need to think twice and use that extra cash for paying up some of that debt. You will only need to do it until your credit card debt is wiped out. Once you’re debt free, you can use all those extra money for entertainment and future savings. So what are these extra cash sources? How about income from garage sales or overtime work? Depending on what you do, you may have other sources of extra income.
