If you find yourself buried under piles of credit card bills, it might be time to try and get out from under them before it gets any worse. This means not adding in any more debt, prioritizing all of your purchases, and keeping yourself on track to be sure that you are truly out from under all that debt. While it may seem like a lot work, it is worth it in the end and can even give you a better lifestyle once you are done paying off the cards. So here are the tips to reduce your credit card debt.
Tip 1: Gather all your statements and bills.
The first thing you need to do is round up all of your statements and debts. Take a piece of paper and organize them in two different ways – by the largest amount owed, and by the highest interest rate. Save these lists and move onto your weekly or fortnightly income. Keep in mind that payment schedules may differ across your debts, so you really need to make sure you know when your bills are due and when your pay packet comes in as well.
Tip 2: List down all the balances, living expenses and all the money coming in and out of the household.
You need to write down a list of everything you have to pay for each pay period. This means your rent, food, utilities, and the smallest amount of pocket money that you think you can get by on. Once you have done this, compare it to your overall pay and put the excess aside each pay period.
Tip 3: Sort out all your debts – get organized.
Now you can come back to your bills. Find out what the minimum payment is for each debt and arrange to pay that payment each and every month. The excess that you have left over is what you are going to use to pay down your debts and make sure you get your life back in line.
Tip 4: Use a stack method to pay off your debts.
The stack method is a way that can benefit the debtor by saving money on the interest. The stack method works by paying the debt with the highest interest first.
The result is to help you pay off your debt sooner because you automatically reduce the amount of interest that you pay and therefore slashing the time it takes you to pay off your loan.
Once you pay one card off, either close it or put it away in a place that you can’t access it. Be sure that you aren’t putting more debt onto it before you have paid everything else off. Then put the payment and the minimum payment that you were making onto the next card until you have no more debt.
Once you have used the stack method to pay down your debts, you should keep saving your excess funds each and every month. Put them into your bank and hold onto them and use this as your emergency fund.
Tip 5: Set a budget for all your expenses.
By putting yourself on a budget you will truly see what you need to spend and what you want. When you get rid of your debt, you will be used to living on that budget and can use it to get yourself the things you really need and want without going back into credit card debt.
Tip 6: Seek professional help
If you need some professional help on handling your finances, do not hesitate to seek the help of a professional advisor. If you really want to get the best tips to reduce your credit card debt, then start with steps 1-5 and if you are still struggling with your finances it is best to give step 6 a go to help guide you in the right direction.