Given our propensity to live vicariously through our credit cards, it’s no wonder that living well beyond our means suddenly catches up with us. If you find yourself mired in mounting credit card debt, don’t panic. There are solutions to get out of credit card debt. The first and most important decision you must make is to end your reliance on credit. The next step is to put a plan in motion to eliminate credit card debt for good. This situation didn’t materialize overnight and it won’t be solved in a day. However, in time your debt will be reduced. So, how does one get out of credit card debt?
Cut Up Those Cards!
Want to stop buying on credit, but can’t seem to kick the habit? Then cut up your credit cards. It’s that simple. However, do not call the credit card company and put a hold or cancel the card before you’ve paid off your balance. In some cases this can adversely affect your credit rating. What you want to do is to eliminate the source of your pain and cutting up your cards will force you to live within your means.
Attack the Smallest Balances First
One of the biggest mistakes individuals make is to pay off the minimum monthly amount on all their cards. What you want are victories, even if they’re small ones. While a number of financial advisers advocate paying off the highest balances first, we’ll leave those higher balances for the next point. For those smaller balances, pay them off as soon as you can. Once you’ve cleared them, close the account immediately. Paying off a small credit card balance and closing it is much better for your credit rating than simply paying off the minimum balances on a bunch of credit cards.
Use Debt Consolidation Loans
Take your largest outstanding balances and use a debt consolidation loan to amalgamate that debt into one large sum. In some instances, debt consolidation loans can reduce your interest rates by 40% or more. The benefit is that you’ll no longer be paying off minimum balances, only to see those payments swallowed up by those aforementioned high interest rates. Instead, with lower interest rates through a debt consolidation loan, more of your money will go towards paying down your actual debt.
Making a decision to end your credit card debt is the first and most important step. Ending your reliance on credit might just involve you cutting up your cards. If you’ve become so reliant upon credit, it’s because you’ve become accustomed to the flexibility of pulling out your credit card whenever it tickles your fancy. Eliminating that urge sometimes takes drastic measures. Next, pay off your smallest balances owing. It will improve your credit rating and give you a sense of accomplishment. Finally, amalgamate your debt into one large debt consolidation loan.