Dr. Kavita
Credit card debt has now become a cuss word for a vast majority of us. America and many other developed nations of the world are reeling under credit card debt. We hear millions of readers ask us the same question again and again: How to reduce debt? Maybe it is the convenience that credit cards give us to buy now and pay later that pushes us into the dark hole of debt. Before we realize we are already in a financial mess and chances of coming out of that dark hole of debt seem very slender.
Today we will discuss how credit card debt can be eliminated in six simple steps.
Make a list of your debts
Maybe you have many credit cards and have different amounts of debts on each of them or hopefully just some of them. Whatever the amount and rate of interest that is being charged on the cards must be written down in a list. This list should help you provide a quick assessment of your outstanding debts at the first look.
Determine a monthly budget
Despite the fact that you are drowning in credit card debts, you must be having a source of income that provides you with a certain amount of money each month. Try to budget this amount and make clear cut demarcations for your monthly expenses (that are unavoidable) and then put the rest of the money in to a debt fund.
Look at the debt with highest rate of interest
Now at this point, you will need to go back to your list of credit card debts and then find out the one that has the highest rate of interest being charged to you. This debt is the most dangerous one that is undermining your financial stability.
Now look at the amount that you are paying each month towards this debt. Whatever that amount is, you now need to put away more from your debt fund towards this particular installment. Usually most of us do not have any debt elimination strategy/plan. And all we can think of is to equally distribute all our monthly savings between the numerous credit card debts that we carry. But this will not help with effective debt elimination.
Instead, prioritize the debts according to rate of interest and then systematically distribute the funds between them.
Keep continuing until you pay off your debt
Try to stick to this schedule until you get the credit card debt with the highest rate of interest off your chest. Once you finish the debt payment on this card, make sure you get rid of it totally.
Pick the next card
Using the same strategy, now you need to pick the credit card with the next highest rate of interest and focus on this one until you get the debts on it fully paid, like the first one.
Stick to basic minimum
This process will not help you get debt free overnight, but it definitely works if you stick to the schedule consistently. Once you get all the major debts paid off, stick to the basic minimum number of credit cards that you require. More credit cards only mean more debt.
We hope you liked our article How To Reduce Debt, Especially Credit Card Debt In Six Easy Steps. If so, do let us know in the comments below.
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