It’s seductive and appealing, and many succumb to the lure every day. Credit cards, intended to make spending painless and easy, have morphed into a form of financial quicksand that traps and ensnares unwitting victims into credit card debt.
When you are buried under the burden of debt, it is only natural to want to quickly eliminate as much of it as possible. The interest on outstanding credit card debt mounts rapidly. Having a large amount of money owing on your card makes it harder (or even impossible) to get additional loans, even if it is for essential things like health or emergency expenses.
Yet the important thing to do if you’re reeling under a debt burden is to avoid panic. It certainly is desirable to get out of debt quickly. But it is far better to do it on your own, rather than getting into other forms of debt or taking on additional risks. Too many debtors find themselves stuck because they try to pay off credit card debt too quickly. By setting goals that are over-ambitious, they set themselves up for disappointment and discouragement when they fail to reach those targets. Eventually, caught in a web of despair that there is no way to eliminate their debt, they file bankruptcy.
The first step towards intelligently paying off credit card debt is to make realistic plans. Set yourself a budget. List all the items that you spend on every month. Then make a separate list including all the things from your first list that are not absolutely essential. You can save the money you’re currently wasting on those items to pay back your credit card bills.
Here are a few ideas to get you started:
1. Stop eating out
Maybe you pick up a sandwich at the deli for lunch while you’re at the office. Or perhaps you stop by the local coffee shop for a cappuccino every morning. A love for dining out with friends at fancy restaurants might be leaving a dent in your wallet. All of these expenses can be avoided with some planning and discipline. Carry your own lunch to work. Make your morning coffee at home. Cut down your group dinners to once a month. Or find a less expensive place to dine.
2. Break habits
If you’re in the habit of lighting up a cigarette or cigar every now and then, or are addicted to those delicious creamy desserts at your neighborhood cake shop, then these are great areas to cut back. When you quit smoking, you’ll get healthier in addition to saving money. Making your own healthy snacks at home will save you other hazards from weight gain and high cholesterol later on.
3. Modify leisure activity
Critically analyze your entertainment budget. You don’t have to turn into a recluse just to pay off your credit card bill. At the same time, if you notice a pattern of expensive indulgence in leisure activities, that may be a good place to start saving money. For example, if you enjoy watching films and rent many DVDs every month, consider changing to a plan that allows unlimited rentals at a fixed cost. Review your Internet browsing to see if changing to an unlimited broadband plan can save you money.
4. Change travel patterns
As fuel prices skyrocket, travel accounts for a large share of any family’s expenditure. Cutting back on this can help pay off credit card debt easily. See if you can share vehicles to travel to work with colleagues. If family members take similar routes or can schedule work to travel together, it will save money while giving you a chance to spend more time together. The amount you’ll save from these minor changes can be significant.
With all these tweaks, you may still not be able to pay off your credit card debt overnight. That doesn’t matter as long as you make steady inroads into your unpaid balance, and gradually diminish the outstanding balance which attracts usurious interest rates. The good news is that the habits that you acquire in the course of reducing your credit card debt will put you firmly on the path to financial independence and keep you out of the quagmire of debt even in the future.
Sam Jones, the author, has been looking at debt advice on uSwitch.com in order try and work out the best strategies to deal with individual debt issues. The reality is that there are a variety of ways to help manage credit card debt but that you need to be very cautious of the steps we take and the choices we make to tackle our debt.
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