Knocking Out Your Credit Card Debt
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Credit card debt has become common for some families, but you can get rid of it once and for all if you're ready.
Dumping Credit Card Debt
NerdWallet did an analysis data from the Federal Reserve and others on average households' credit card debt.
They found that the average household has $7,087 and when you look at just the indebted households it comes out to $15,191.
Families not only have to deal with the balances, they typically have to pay high interest rates on them, making it harder to get out of debt.
What if you are one of those families and you're tired of having your paycheck being devoted to just keeping up with the bills? There are ways you can take control of your finances and gain your financial freedom.
Find Out Exactly How Much You Owe
This may seem like a obvious step, but too many couples skip it.
You may be surprised with what you find out like discovering that your interest rate had shot up on one (or more) of your credit cards.
Once you have a list all your creditors, the interest rates, and the total amount you owe, it's time to get organized.
You can use free online tools like Personal Capital, Tiller, or Mint to pull that data for you.
Stop Using Credit Cards!
When I had credit card debt, taking the cards out of my wallet was a easy and effective step.
I had less temptation to rely on them when I wanted to make an impulse buy.
I was creating a barrier for myself and improving my finances. For others, you may have to lock them away or shred them to stop using them.
Tucking away your credit cards isn't enough. You can't get out of debt if you keep going back into it.
The two of you need a spending plan that will avoid having to rely on credit cards in between paychecks. It has to be realistic and sustainable.
Choose a Payment Plan That You Can Keep
The wonderful thing with getting out of debt is that there are several different routes you can take to reach your goal. Use either a debt snowflake, snowball, or even an avalanche to work your way to being debt free.
Just use a method that works well with your spending habits. Highest interest rate method is the financially sound decision and lowest debt is the psychologically empowering decision.
I went for the debt snow ball method (lowest balance first) to give myself a win quicker and to keep me on the plan. When we were married and were paying off the car loan early, we relied on one another to keep motivated.
You two can set up payments through your credit union or bank so you don't have to constantly worry about whether you did it while juggling your regular responsibilities.
Staying Motivated While Getting Out of Debt
Speaking of encouragement, most of us can appreciate rewards. As humans we all need incentives to do something.
For some people seeing the numbers go down on their debt is motivation enough to continue. For me, it was celebrating each credit card pay off. Everyone has something that can keep them focused.
It doesn't have to be big or expensive (no need to undo what you did), it just has to be special.
Thoughts on Paying Off Credit Cards
I hope you're revved up to tackle your debt. For those who have conquered your credit cards, what tips do you have on paying off debt?
Great post, Elle!
My best tip for knocking out credit card debt is to use a 0% APY transfer credit card. I was able to transfer my existing 13% APY credit card debt to a card with a 0% APY introductory offer. That bought me 2 years to pay off the debt without incurring additional interest!
Thanks for sharing this Elle. Impulsive buying and sticking within my budget list helps me to reduce any unnecessary purchases. It is hard at times but if your goal is to finish all your debt at your desirable time frame, I know it will work.