Steps to Credit Card Debt Repayment
If you are ever low on funds, credit cards are a great backup for emergencies, right? While this may be somewhat true, credit cards also pose a dangerous threat to many people’s situations, especially if they are unable to pay back the money they spend. Luckily, there are steps available to make sure that credit card debt repayment goes smoothly. Follow Liberty Debt Relief’s outline and you will pay off your credit card debt and be on your way to brighter financial days in no time.
Write It All Out
The best way to get out of debt is to take the time and look at all of the financial statements available for all of your accounts. Start by looking at the financial statements for the past three to six months for all of the credit cards you owe money on and categorizing all of the expenses — groceries, restaurants, bills, shopping, and anything else. By doing this, you can get to the root of your debt and see where you can cut costs. If you find that you are spending a few hundred dollars on eating at restaurants and getting coffee every month and very little on groceries, for example, you can make it a monthly financial goal to spend more time cooking and making coffee at home. This one simple move can end up saving you hundreds of dollars.
Check Your Budget and Plan a New One
Once you know how you tend to spend money every month, you can start planning a new budget to pay off debt. Other than switching from restaurants to cooking, there are plenty of ways to save money. To plan your budget, start by writing out what your expected income is every month and make sure to include money from part-time jobs or financial assistance programs. Then, make a list of all your top-priority expenses, including utility bills, rent or mortgage, car payments, and insurances. After marking down those expenses, you can play around with the numbers to figure out how much you can spend on gas, groceries, personal care, shopping and of course, paying back your debt.
Budgeting is one of the most important steps for successful debt repayment. In order to change your financial situation, you have to change your financial habits. When making a new budget, make sure to designate a portion of your income strictly toward paying back debt. How much you set aside, of course, depends on how much you owe and your income.
Find the Process that Works for You
Now that you have a plan to use a certain portion of your budget towards debt, you have to figure out how you want to divvy that money up between your accounts. If you are just looking to pay back debt for one credit card, then you can simply allocate all of that budget portion towards the single card. If you are dealing with multiple credit card debts, however, then the best way to get out of debt is by figuring out how much you owe to each account and the interest rates and fees associated with each one.
There are many different debt relief strategies you can employ to accomplish this. Some prefer the snowball method, in which you put most of your money towards the debt you can pay off first. If credit card A has a $1,000 balance with an 11% interest rate, credit card B has a $3,000 balance with a 12% interest rate, and credit card C has a $4,000 balance with a 15% interest rate, you would choose to spend the majority of your debt budget to paying off credit card A first. Others prefer paying off accounts that can do the most damage first, in which case you would spend the majority of your budget on credit card C. You could also simply divide the money equally between the accounts.
Write Out Goals that Will Motivate You
Regardless of which debt repayment method you prefer, the key is to stay motivated. Try making smaller goals that you know are attainable. Instead of worrying about paying off credit cards A, B and C all at once, for example, make it a goal to pay off credit card A within six months, B within a year, and C within two years. If simply making payments has been a struggle for you in the past, you could aim to make your payments on time and in full every month. And when you do reach these goals, it is always important to reward yourself. That reward does not have to be anything expensive, but you could treat yourself to a night out, a new restaurant you have been wanting to try, a book you have been dying to read, or even an article of clothing you constantly pass on your way to work.
Having these smaller goals and rewarding yourself for them will only make you more motivated to get out of debt. Finances do not have to be a stressful burden, they can be an exciting tactic that pushes you toward bettering yourself all around.
Get Started on Getting Out of Debt
The most important thing to understand about getting out of credit card debt is that you do not have to go on this journey alone. Liberty Debt Relief’s debt consultants are always available to answer any questions you may have about your situation and educate you regarding how you can get out of debt most efficiently. Contact us today and start securing your debt-free future.
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