Eliminating Credit Card Debt: How to Do It Smartly

While a good credit score and a strong financial history are what everybody, under the sun, loves to have, it is all the more important to put yourself in a solid financial position in a scenario of economic uncertainty. And one of the most effective ways to do that is to reduce your credit card debt as soon as possible. While some of the people still don’t have credit cards, those who have typically carry a balance. And an organized, disciplined approach can definitely help you out in getting rid of the credit card debt no matter if your balance is $3,000 or $30,000. Here are some of the most effective tips that will help you reduce your credit card debts easily –

• Consider your financial condition – Before you plan anything for reducing the debts, it is important to know where you stand and what exactly is your financial condition. It is simply impossible to hit your target unless you know exactly where it is. For instance, you might think that you have got a debt of $9,000, while in reality, you may have a debt of $11,000 or $14,000. Hence, it is advisable to check out your standings thoroughly and be perfectly honest with yourself. Take out all the cards you have, note down the debt and the interest rate and then, make a plan about paying them off gradually.

• Track your costs – Check out how much you spend on all your regular and committed expenses like utilities, mortgage, car payments, insurance, phone bills, minimum credit card payments, cable connection, gym memberships, etc. Next, track what are the variable expenses like entertainment, restaurant meals, travel, etc. This will act as a foundation for the budget that you have to create. Take the credit card bills and the bank statements of the last year to get an accurate view of your monthly spending and make it a point to keep track of every expense that you will make, using a notebook or financial software.

• Improve the interest rates – One of the quickest ways to save large amounts for your credit card bills is to negotiate and manage lower interest rates. If it is possible to shave off even one or two percent on the rate, it will help you save hundreds and thousands while paying off the debt. You never know, maybe a simple phone call and some polite requests will do your job absolutely. Even though your credit score plays a significant role in determining if you get a rate cut or not, it is not the only factor, because every lender treats this issue personally, and therefore, you should definitely give it a try.

• Create a budget – Now this is what you need to do most carefully. The central key to do this job successfully is to be absolutely realistic and check out what are the sacrifices that you can make. Consider the services that you can cut back immediately and plan the expenses accordingly.