Getting rid of credit card debt within a year seems like a very difficult task to complete. However, it is not impossible to do so. You just have to find the self-control, discipline, and determination to complete the debt relief program that you have started.
When it comes to debt, Americans have successfully accumulated a lot of it. Reports reveal that the total consumer debt already exceeded $4 trillion. Among those that are fast increasing is credit card debts. In fact, by the end of 2018, consumers added $41 billion to their current balance. This is quite a lot of debt to pay back. Add to that the high-interest rate of credit cards, this balance will quickly grow if you do not do something about it.
Fortunately for you, all it takes is 4 simple steps to get out of credit card debts. If you do it correctly, you might be able to pay everything that you owe within a year after you started.
4 steps to pay off credit card debts fast
If you want to improve your financial future, it is a must that you get out of debt as soon as possible. Debt, especially the high-interest types like credit card debts, can compromise your financial security. Instead of using your money to grow your net worth, you are forced to use it to pay off debt. You could have used your limited income to save for a financial goal or invest it to allow compound interest to make it grow.
So what can you do to get rid of your credit situation? Here are the 4 simple steps that you need to follow.
Make a list of all your credit card debts
Start by making a list of everything that you owe. Most Americans own more than one credit card account. List all that is under your name. Make sure you write the credit card details like the balance, interest rate, due date, etc. This will help you get a general overview of everything that you owe. It will also allow you to determine how much you need to pay back.
Look at your budget plan
Once you have listed all your credit card debts, you need to analyze your current financial situation. How much are you earning each month? And how much of that is being spent on your basic necessities and other monthly expenses? You want to update your budget plan so you can figure out the amount that you can allocate towards your debt payments. If you want to get out of debt within a year, you should pay the highest amount that you can afford. The more you can pay, the shorter the repayment period will be.
Choose a debt consolidation program
Once you have figured out how much you can afford to pay, it is time to determine the debt relief program that you will use. At this point, your best option to deal with your credit card debts is consolidation.
Choosing debt consolidation means you will have a simple repayment plan. Not only that, you can probably save on your debt payments – especially if you can negotiate a lower interest rate and have a shorter repayment period. As you pay the consolidated debt, you will also be strengthening your credit score.
The question is, what type of consolidation strategy will you choose? There are so many options to choose from. You have debt management, balance transfer, and debt consolidation loans. Make sure you to consider your financial situation before you make a choice. That way, you can smartly choose the right debt solution that you can stick to.
Pay off the debt regularly
Did you know that more than half of credit card owners do not pay their credit card debt in full each month? This is oftentimes what leads to this type of debt accumulating. If you have decided to consolidate debt, you need to make sure that you can stick to your payments.
When you choose the right debt consolidation strategy to pay off your credit card debt, it should be easier to complete it. After all, it should be perfectly suited to your current financial situation. That means the payments should be affordable. Not only that, but it should also be aligned with any financial goals that you have. When you know the credit card debt consolidation will bring you one step closer to your goals, it will motivate you to do better.
Tips to pay off credit card debt fast
If you really want to pay off all your credit card debt fast, you need to follow a couple of tips to be successful. These can be applied regardless of the debt consolidation strategy that you choose to do.
Revise your budget plan
Start by revising your budget plan. If you landed in debt, there is a high chance that your budget plan was flawed, to begin with. It is probably time to check and make sure that it is updated. And while you are at it, you might as well create a bare basic budget plan. This will help you maximize your monthly payments. It gives you the chance to analyze your spending and see where you can save on. Anything that you stop spending on can be used to increase your debt payments.
Stop adding to your debt
The more that you add to your debts, the longer it will take for you to get out of debt. If you want to achieve debt freedom within a year, you have to stop adding to your credit card debt. Stick to using cash for now. If you cannot afford to pay for something in cash, do not buy it. Do not worry because this will only be temporary. After you have paid at least a significant portion of your debts, then you can think about using your credit cards once more. But when that time comes, you should have developed smart spending habits. This practice should help you be more cautious about spending your money.
Increase your monthly payments
Any chance that you get, you need to make an effort to increase your monthly debt payments. If you get a bonus, use it to pay more of your credit card debt. In case someone gives you money, use it to pay your debts. Go through your stuff and declutter your life. Anything that you do not need should be sold. The profits can go to your debt payments too. Every little effort will soon have a significant impact on your balance.