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Aug 04

6 Tips For Getting Out of Credit Card Debt

Reading Time: 4 mins

People experience debt crises at some points in their lives, but they can be resolved. A common misconception is that credit card debts can be impossible to get out of, but a workable solution is available with the right approach. There is no fast way of getting out of credit card debt, but can be a stress-free and achievable feat with focus and determination. Your credit card debt management can affect your credit score and your future financial transactions, so it’s imperative to manage and settle your credit card debt as efficiently as possible. Some tips for getting out of credit card debt are shared here to help improve your financial stability and credit score.


Get Professional Assistance

Nothing is embarrassing about seeking assistance from financial advisors or other finance management professionals because you are shouldering credit card debts. Assisting consumers in managing their financial resources is part of their job, and they will be glad to be of service to you. They will provide you various options in resolving your debt problems, such as credit card debt relief, debt consolidation, or debt management plans. The latter options are offered in coordination with debt advice or counseling agencies.

It helps to have a professional guide you on how you can manageably shave off your piling credit card debts and still have some money left for your needs. Whether you made a credit card mistake at the outset or you have a recurring or accumulating credit card debt over time, trying to rectify your credit card problems can be a daunting task. Debt management counselors or financial advisors can give you valuable input and help improve your financial outlook and debt management approaches in your future transactions.


Examine Your Current Financial Situation

It is essential to conduct an assessment of the current status of your finances. Do not just focus on your credit card debts but also on your other expenses and all the financial obligations that you have, such as your monthly bills or other loans. Using this approach in assessing your financial situation can help account for everything and not miss a crucial detail that might hinder you from making an effective strategy in managing your debt. Compare all your expenses with your current income. As with your expense assessment, your income examination should not only focus on your salary but also on other transactions or activities that generate money. Even the interest earned from your savings can be factored into your income.


Pay The Debt With the Highest Interest or Balance First

If you want to also save money while reducing your debt, approaching your payments from the largest or most expensive balance first is an excellent strategy. This way, you can take out the most significant debt obstacle by settling it first, then take on the debt with the next-highest interest, and so on. It takes commitment to pursue this approach for it to succeed. You need to set aside a fixed amount of money for debt payments, with the largest chunk directed towards the debt with the highest interest or balance. Maintaining this fixed amount even after paying off the largest debt helps make the next highest and, eventually, lowest debts easier to manage and faster to pay off.


Settle Your Debts from the Smallest to the Largest

Using a reverse approach to the previous strategy is also effective for people who want to see positive results in their repayment efforts. The sense of accomplishment in paying off the lowest debt can give a strong positive reinforcement that will encourage you to settle the larger debt next up until the biggest one. It is also a preferred approach by consumers who are struggling to stabilize their finances until they can establish a fixed amount they can set aside for debt repayment.


Monitor and Control Your Spending

Managing how you spend might be one of the oldest tricks in the book when it comes to debt management, but it is also the most effective. Most financial troubles people find themselves into come from unmonitored spending. It’s not enough that you know the things you need and want. You also have to know what to buy and not to buy and when to pay for your necessities, wants, and obligations. Groceries, utilities, rent/mortgage, and even fuel fall under our basic needs and must have a regular budget available, nice-to-haves like restaurant dinners, coffee shop dates or hangouts, and parties can be reduced to a bare minimum. Also, do not forget financial obligations that need attention and update, such as minimum payments on credit cards, installments, and other debts. And then, there are the irregular recurring expenses. These are tricky things in life that either seem necessary or come out of nowhere and give you unpleasant surprises. Car repairs, tire replacements, and insurance costs can often be troubling if you do not take measures to cover them. Holiday gifts, weddings, birthdays, and out-of-town travels may seem harmless, but they can take a big bite out of your budget if you do not plan and manage them properly. While you are working your way to free yourself from a credit card debt, list down and categorize all your spending items and pick out those you can do without.


Use Cash

Another practical yet effective solution is to go back to the basics – using cash for purchases. Having physical bills to handle, see, and count can have a psychological effect on your spending. It tends to make you think twice about spending too much on something and encourages you to think of ways to have some bills left in your pocket or wallet. While cashless transactions with a credit card may be convenient, its charm may be too much for an enthusiastic shopper or spender. Switching to cash can be a way to help limit your credit card usage and save money while reducing debt.


Some people think getting out of credit card debt is an insurmountable task. It can be if you approach the problem head-on and without a plan and strategy. Don’t think of settling your debts instantly at the cost of depriving yourself of basic needs. A balanced and well-thought-out approach is what you need to get out of the mire of credit card debt.



Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.



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