Saturday, August 25, 2012
5 Tips to Pay Off Credit Card Debt Fast
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5 Tips to Pay Off Credit Card Debt Fast
Credit card debt is very easy to rack up because you can spend it on anything you like and continue to do so until you’ve hit your limit. Unlike other loans such as school loans and car loans which have a specific purpose, you are free to spend however you please with your credit cards, which is why many people get trapped in unmanageable debt. The average household has just under $16,000 in credit card debt but having more than that is not at all uncommon. So how can you get rid of your credit card debt faster?
The Amount of Debt
Before beginning a plan of any kind it’s important to know how much debt you really have. Many people just assume a number but have no idea exactly how deeply in debt they are. Check all of your statements, call all your credit card companies and find out exactly how much your owe. It’s easier to keep track of it if you write down the amount you owe along with the minimum payment and when it’s due. This way, you have all your records right in front of and you can begin to manage it properly.
Stop Using Your Credit Cards/Budget Yourself
This seems like common knowledge but once you start paying off your credit cards, you don’t want all your hard work for nothing by getting them racked up again. Get into the habit of planning out a budget for yourself that you can pay your expenses in cash. Keep tweaking this budget until it works for you; if you find you spend more than you should and can’t work on paying down your debt, try to lower some of your variable expenses or get a second stream of income.
The Snowball Method
The snowball method is a very simple way of saving a lot of money on interest and it’s very effective if stuck through to the end. Basically with this method, you single out your debt with the largest interest rate and focus all your money into that first; only pay the minimum payment on the remainder of your debts until the one you’re focusing on is paid off. Once that one is paid off, move onto the next highest interest rate and continue this until all your debts are paid off. By using this method, you’ll save on the accumulated interest of your high interest credit cards and can use the money that you save to accelerate your debt repayment program.
The Snowflake Method
While the snowball method focuses on putting a lot of your energy into one debt at a time, the snowflake method focuses on making very small payments as often as you can. The point of this method is the accumulation of the small change that we would otherwise spend on something we don’t need. We’re literally talking about $4.57 payments and $13.81 payments. These seem too small to matter but if you put these into your debt as often as you can, within a month that could be an extra $100 or more. By using these methods together you can get even more out of your debt plan and pay off your credit cards even faster.
Paying Debt Doesn’t Happen Overnight
Paying back debt can be a long and tedious process but it’s well worth it in the end. The important thing to remember is that consistency really is the key to succeeding and to stick to the plan no matter what. If you just pay off a little bit and then stop or continue to use it and rack it up again, you’re right back where you started. Use these steps to help pay off your credit card debt and try to keep at it for an extended period of time. By working hard and being consistent you can be out of debt in no time.
Staz Johnson has been passionately blogging about personal finance, investing tips, economic news and more. For more information, check out her website at Essential Finances.
Credit card debt is very easy to rack up because you can spend it on anything you like and continue to do so until you’ve hit your limit. Unlike other loans such as school loans and car loans which have a specific purpose, you are free to spend however you please with your credit cards, which is why many people get trapped in unmanageable debt. The average household has just under $16,000 in credit card debt but having more than that is not at all uncommon. So how can you get rid of your credit card debt faster?
The Amount of Debt
Before beginning a plan of any kind it’s important to know how much debt you really have. Many people just assume a number but have no idea exactly how deeply in debt they are. Check all of your statements, call all your credit card companies and find out exactly how much your owe. It’s easier to keep track of it if you write down the amount you owe along with the minimum payment and when it’s due. This way, you have all your records right in front of and you can begin to manage it properly.
Stop Using Your Credit Cards/Budget Yourself
This seems like common knowledge but once you start paying off your credit cards, you don’t want all your hard work for nothing by getting them racked up again. Get into the habit of planning out a budget for yourself that you can pay your expenses in cash. Keep tweaking this budget until it works for you; if you find you spend more than you should and can’t work on paying down your debt, try to lower some of your variable expenses or get a second stream of income.
The Snowball Method
The snowball method is a very simple way of saving a lot of money on interest and it’s very effective if stuck through to the end. Basically with this method, you single out your debt with the largest interest rate and focus all your money into that first; only pay the minimum payment on the remainder of your debts until the one you’re focusing on is paid off. Once that one is paid off, move onto the next highest interest rate and continue this until all your debts are paid off. By using this method, you’ll save on the accumulated interest of your high interest credit cards and can use the money that you save to accelerate your debt repayment program.
The Snowflake Method
While the snowball method focuses on putting a lot of your energy into one debt at a time, the snowflake method focuses on making very small payments as often as you can. The point of this method is the accumulation of the small change that we would otherwise spend on something we don’t need. We’re literally talking about $4.57 payments and $13.81 payments. These seem too small to matter but if you put these into your debt as often as you can, within a month that could be an extra $100 or more. By using these methods together you can get even more out of your debt plan and pay off your credit cards even faster.
Paying Debt Doesn’t Happen Overnight
Paying back debt can be a long and tedious process but it’s well worth it in the end. The important thing to remember is that consistency really is the key to succeeding and to stick to the plan no matter what. If you just pay off a little bit and then stop or continue to use it and rack it up again, you’re right back where you started. Use these steps to help pay off your credit card debt and try to keep at it for an extended period of time. By working hard and being consistent you can be out of debt in no time.
Staz Johnson has been passionately blogging about personal finance, investing tips, economic news and more. For more information, check out her website at Essential Finances.
This post was written by: Franklin Manuel
Franklin Manuel is a professional blogger, web designer and front end web developer. Follow him on Twitter
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