Apr 10 2014
The world revolves on credit. More and more individuals are dependent on these plastic cards for their daily survival. The problem with this is that you lose financial accountability and sound judgment over a period of time. Without credit cards in the picture, your expenditures will always be limited on one thing – how much cash you have on hand. When you are forced to work with the amount of cash you have with you, you’ll think twice and even thrice before making a major splurge. However, plastic cards allow you to bypass that. You can basically get whatever you want and pay for it later. The first part is relatively easy; it’s the second part that reins in all of the problems.
1. Get rid of your credit card.
The first step to eliminating your credit card debt is by making sure that you don’t have any more of it any time soon. This would mean cutting up your credit cards. Don’t fall into the trap of using your credit card to cover the difference between how much you earn and how much you spend each month, even if you do pay the credit card bills once they come. This will only result in a cycle of paying and borrowing, and you’ll never free yourself from the bounds of credit card debt.
2. Get all of your bills and find out what you’re up against.
Ignoring the problem does not solve the problem. Underestimating the problem, because you do not know the actual extent and gravity, is just as bad. To know what you are up against, you should get all of your bills and find out how much you really owe. If you have bills which are missing, call up your credit card company and request for these bills although your overdue amount is usually found in your monthly bills. By know exactly how deep in debt you are, you can plan your payments accordingly and in a manner that allows you to settle your debt within the soonest time possible.
3. Organize your credit card debt according to their interest rates.
If you have more than one credit card with an outstanding balance, then you need to start prioritizing. There are two things which you have to take note of when paying off your debt – the principal debt or how much you originally owe, and the interest or how much you’re being charged for holding a debt. The higher the interest is, the longer it would take for you to shrink the principal especially if you are just paying the minimum. However, if you aggressively work towards eliminating that debt, the smaller principal will mean that that the interest, which is based on the former, will also shrink significantly.
4. Cancel a credit card once you have paid it off.
Debt, just like other mistakes, comes with an invaluable lesson and that is to never have one again. So it would be remiss if you using a credit card once you’ve already gone through the painstaking process of paying it off. On the other hand, cancel the credit card once you’ve already paid it off to keep you from getting tempted. All of these tips will teach you how to get out of credit card debt fast.
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Phil Farell is a finance writer who loves to give useful tips to overcome bad debts. He also shares his insights on investing, financial management and lease financing.