It’s never a smart idea to allow your credit card debts to pile up. However, most Canadians end up doing exactly that. Don’t be depressed if you are currently nose-deep in credit card debt. There are several ways to get out of the situation that you are in.
First of all, you need to realise that it is possible to be debt-free. Secondly, you must commit yourself to the goal of getting rid of all your credit card debt. Once you have made up your mind, read ahead to find out the best strategies to reduce or completely eliminate your credit card debt:
Keep Track of All Your Loans
When you have multiple credit card loans due, it’s difficult to understand the exact amount you owe. So, make a chart of all the credit cards you have to pay off, the amount due, amount already paid, and the interest rate. If you make this chart on a spreadsheet, it will make it easy to sort fields later. This chart will give you a good understanding of your credit card debt. You will be able to set realistic financial goals using this chart.
Pay More than the Minimum Required Amount
If you are only paying the minimum monthly required amount, then it will take years for you to be rid of credit card debt. The minimum requirement is calculated so that the debtor stays clear of default, but not without being close enough to completely paying off the debt, at least for several years. This method generates enormous profits for the card issuer in terms of interest. So, if you want to beat the math, you must pay more than the minimum. Even paying 10 dollars more each month is better than paying the minimum.
Increase Your Income
Obviously, paying off your debt will be much easier if you earned more each month. That’s easier said than done. However, there are ways that you can increase your monthly income without getting a promotion. Seriously consider doing a part-time job on the weekends when there’s time. If you do, use all income from your second job to pay off credit card debt. You can freelance online from home to earn some extra cash each month, which you should use for nothing other than paying off your credit card debt. If getting a second job is not possible, hold a yard sale. See if you can find anything around the house that you can auction off online. You can use this money towards reducing the balance of your debt.
Make Cutbacks at Home
You will have to become extremely frugal until you are debt-free. Yes, you will have to budget. There are a number of expenses that you can reduce at home that won’t leave your family starving. First, eliminate all entertainment costs. These would be the money you spend on eating out, going to the movies, going on vacations, and so on. Then, don’t shop for things like clothes and shoes unless absolutely necessary. Eliminate all expenses that you can truly do without at home if you want to be debt-free as soon as possible.
Consolidate Your Debt
If you owe back money on several credit cards, you can reduce the amount you pay in interest by consolidating your debt. Basically, what will happen is that the bank or another agency will review all the loans you owe. Then the institution will combine all these small loans into one big loan, thereby consolidating it. At first, it will seem like you owe a lot of money. However, you will only have to pay a single interest rate, which significantly reduces the total amount you pay back as interest for several different loans. You can take out a second mortgage or a similar low-interest loan to repay a consolidated loan.
Carefully consider these suggestions. Try one or two to see which ones work for your situation the best. If you want to consolidate your loan, first consult with a non-profit debt counsellor to check whether the option is suitable for you.