Credit Card Debt can be an expensive type of debt to have. In this guide I take a look at how you can escape your credit card debt. It should help you work through a plan to break up with your credit cards once and for all.
It can be all too easy to become reliant on your credit card, and this can have a disastrous effect as your credit card debt soon starts mounting up. Before you know it, your credit card spending has gone out of control and you are not sure how to correct things.
1. Time to accept you have credit card debt
- With debt, any type of debt for that matter, you should admit to yourself that things are out of control. Only when you accept you have a problem can you take steps to solve it.
- Now you have accepted you are in debt, it is time to look at what you are spending your money on. You can use a pen and paper to make a list or a spreadsheet which makes things a lot easier. You could also visit the guide on this blog about budgeting, or complete the income and expenditure form. This will give you a good overview of what you are spending your money on, and forms part of the troubleshooting process you go through to start solving your debt problems.
- It might be an idea to cut up your credit cards or have them hidden away from you, that way you won’t be tempted to spend on them again.
With the above process completed, you should have a much better understanding of your finances which leads us to the next step.
2. Cut out unnecessary expenditure
- Interest charges are probably the most expensive part of your credit card debt. If you are being charged large amounts of interests, you should look for a better deal. This of course assumes you have a good credit rating, if not then this wouldn’t be an option. You would also need to be very disciplined if you get another card, and not be tempted to spend again on your old one.
- Look at your monthly budget to see if you can remove any further costs. Are you able to spend less on your weekly food shop? Do you really need Sky Sports? Check everything and see if you can reduce what you spend. It can be helpful to set a goal of saving say £100 per month, then trying to find that within your budget by cutting things out or reducing them.
3. Pay off your most expensive Credit Card Debt first
- If you have managed to find any extra cash, then you should put that towards repaying your most expensive credit card debt first. Doing so means you are paying less interest each and every time the balance reduces and you are saving money in the process.
- Once you have repaid the most expensive card, move to the next and repeat until all your credit card debt is repaid.
- If you can get a personal loan that is much cheaper, you could consolidate your credit cards that way and save money. However you should close your existing credit card accounts so you don’t fall into the same trap again. You should get financial advice before committing to anything though.
4. Don’t spend any more on credit cards, save instead
- Once you have escaped your credit card debt, start saving the money you was using to pay off your credit cards. Over time this will soon mount up, and you will have a nice cushion to protect yourself from the unexpected.
What if you are stuck?
If you are really struggling with Credit Card Debt then you should consider getting in touch with a Debt Advice organisation. Head on over to the Debt Help page to find a list of organisations who can help you with your debts.
It is important to point out that you are not alone in your debt problem. There are 1000’s of people in debt, including myself so please don’t worry. Getting help will make you feel much better, especially once you are sorting out your debts.
Your ideas for escaping credit card debt?
How would you approach escaping credit card debts? Please leave your suggestions in the comments box below. I look forward to hearing from you.