It is easy to fall into a serious debt problem, especially with credit cards that offer instant access to cash. If you have an impulsive buying behaviour, and a habit of paying only the minimum amount due in your monthly credit card bill, you could have maxed out your credit limit before you even notice it. Take note that credit cards charge very high interest and finance charges, and these accumulate fast.Key Steps to Paying off Credit Debts
When you are stuck with huge credit card debts, owning the responsibility is the first step to getting out. Accusing the bank of overcharging will do no good that is the name of the game, and you fell right into their trap. You must have other debts to think about, but if you manage your finances well, it is only a matter of time before you become debt free. Below are a few tips to follow.
- Segregate your income accordingly. Don’t think about getting a loan to pay off your credit card debt. You will never clear out your financial obligations if you will always rely on other peoples money. Learn to budget your income, and try your best not to spend more than you can afford. List down your monthly expenses from the most important down to those you can live without. Trim down your expenses by limiting your visit to the restaurant, crossing out some items in your grocery list, or passing from casino for the time being. Through proper budgeting, you will realise that you can come up with enough funds to pay more than the minimum amount due in your monthly credit card bill.
- Use the snowball technique. This can help if you have a number of debts to pay for. The snowball technique works by targeting to settle the full balance of the smallest debt first, before moving on to the next. For example, you have a 300 grocery credit card, a 500 gas station credit card debt, and a 1000 utilities credit card. Use all your extra cash for each month to pay your grocery credit card while you only make minimum debt repayment for your other 2 credit cards. Once the grocery credit card balance goes down to zero, you will now have more cash to add up to your gas station credit card debt repayment. The same goes for your utilities credit card debt.
About the Author:
This guest post was brought to you by Michael. Michael is an expert in personal finances and has written many guides on finance management. He is also a content writer for creditcards.com.au.