7 Tips to eliminate credit card debt
In the current scenario everybody is working hard to achieve their financial goals. Money management has become an essential element in the life of all Americans. The nation’s current economic challenges have inspired more and more people to come forward and clean up their personal finances. Credit card is an essential element which needs to be considered while planning your finances as there are many chances of getting over board when you pay from your credit card. You need to set up limits to follow your goal plan.
Financial experts have laid down 7 ways to eliminate credit card debts and achieve your financial goals quickly and easily:
1. Stop charging your credit card and use cash
It is noticed that people tend to spend more when they are paying by card in comparison to those who pay cash. While charging the card we are not looking at the present as the payment for the card is stipulated for a later date. If you commit to leaving without a card for a month you will get drawn towards more conscious spending and will help rein in impulse purchases and reduce overall expenditure.
2. Prepare your own budget
It is very important that you make your own budget. You know how much you earn each month so budget yourself and accordingly spend less. You need to prepare a cash flow chart to understand where your money goes. You will realize whether all the purchases that you made were really needed or where made to keep up with the peer pressure. You will realize the additional amounts that were spent on coffee, candy bars ,fast food etc. If you make basic budget chart you will not allow whims, advertising or personal habits to influence spending.
3. Commit to savings first
It is essential that you make saving as a habit and consider like a bill that needs to be paid every month. You can ask for direct transfer of your funds from your account to saving account directly to initiate the saving habit. To help pay off the credit card debts create and stick to your financial budget.
4. Plan you expenses
It is important that you plan your expenses well in advance. You can make reserves for upcoming large expenses like tuition fees, insurance premiums, major car repair or a weekend holiday. You can divide the total expense by 12 and save 1/12th of the total each month. To assist you in eliminate credit card debts you should always ask for automatic transfers each month.
5. Make payments on time
It has been seen that there is high rate of interest that is charged if you do not make your payments on time. It is therefore recommended that you pay bills or credit card debts with checks or set up automatic transfer plans to eliminate worries about a delayed payment.
6. Pay off credit cards which charge a higher rate of interest
If you feel that you do not have adequate cash in hand to pay off all your debts you need to prioritize your payments to those with higher rate of interest. You can pay minimum amount due on card that charges lower rate of interest and put all available funds to the card which charges higher rate of interest. Once that is paid off you can continue to pay to the card that charges second highest rate of interest and so on until you are debt free. Once you have paid up all the debts continue with paying the full amount of debts and not only the minimum balance required. This is very important to keep you credit card debt free.
7. Seek help
If you feel that you are in serious debts and cannot pay off any more caused by short term circumstances such s medical emergency. If absolutely necessary you can borrow help from relatives, borrow against life insurance or retirement funds, or consolidate old debt onto a no-interest credit card
Once you follow the steps stated above toeliminate your debts, you can stop paying interest to the creditors and instead start saving for the rainy day. Once you start creating your emergency fund you will be the lucky one who is prepared to ride out any economic bumps that lie ahead.