If you want to get your finances on track, the key is to eliminate debt, especially expensive credit card debt. You should not even consider investing money if you are carrying any credit card debt. What good is earning 6 percent on an investment if you are paying 20 percent on a credit card?
Let’s take a look at how you can get that debt paid down fast.
Pay More Than Minimum
The cardinal sin of dealing with credit card debt is just paying the minimum. Paying the minimum on your credit card will pay just a little more than the interest. If you do not want to pay off your debt until just before you die, if then, it is a good plan.
You should be paying at least two times the minimum payment on your credit card. This, in addition to no longer using your credit cards, will allow you to pay off your credit cards fairly quickly.
Use Zero Interest Deals
What kills you with credit cards is obviously the interest. If you can eliminate that interest, you would be able to turbocharge your debt payoff plan.
If you have good credit, apply for another credit card with a low interest or preferably a zero interest period. Then transfer your balances and pay as much as you can on them. With no interest, you can put every penny on the principal.
Keep paying down your debt during the low or no interest period and when it is over, apply for another card with an introductory interest period. Repeat this as many times as you can to keep saving big.
Add Some Extra Income
If you are struggling to make more than the minimum, you can always add some extra income and earmark that money for your credit card debt.
Extra income is easy to add for most people if you are willing to swallow your pride a bit and focus on a goal. Retail work is an easy option. Stores like Walmart are always hiring and they are open 24 hours a day. This means that just about anybody can pick up a shit a week.
Just one shift a week can earn you 400 to 500 dollars a month to pay down your credit card debt. It can allow you to power through your debt in no time at all.
Consolidate Your Loans
If your credit is good enough, you may be able to qualify for a beneficial consolidation loans. Not all credit consolidation loans are created equal though, so be careful. If your credit is not good, you could be paying nearly the same interest as those credit cards are charging.
Ideally a credit card consolidation loan will allow you to pay off your debt at a much lower interest rate. That can allow you to pay the debt down quicker and likely with a lower monthly cost than you are paying now.
An additional benefit is that you are likely to get a credit rating increase after taking out a consolidation loan. The loan itself with increase your credit diversity and using it to pay off your credit cards will lower your credit utilization.
Slash Your Budget To The Bone
If you really want to get ahead of this debt thing, you need to slash all of your bills so that you can focus more money on debt reduction. This seems hard in theory but really is not that difficult.
Your food budget is the easiest to manipulate. Simply cutting out fast food lunches in favor of a brown bag can save you 200 dollars a month. Ramp things up more by implementing strategies such as meal planning and cut your food wastage down to a minimum.
With smart budgeting, the average family of four should be able to cut 400 dollars or more of their budget each month.
Besides food, nothing is off limits. Take a look at every category and look for cuts that can be made. Shop for cheaper car insurance, refinance your car or go to the extreme and move to cheaper housing. Sometimes it takes big moves to make a change in your life.