At one point in time, a vast majority of people will experience the dread that is credit card debt. While it’s not enjoyable, there are lessons to be learned and tools to utilize to get out of that debt. Even though there are tools provided, they have to be used in the correct way. Here are some of the most common ways to get out of credit card debt.
Evaluate Finances
You should begin by creating a list of everything that you owe. This list should include credit card debt and any other monthly bill such as the electric bill, auto insurance, or the cable bill. Included with your credit card debt should be the balance and APR for each of your credit cards. Seeing each cards APR will allow you to take a step back and assess which payoff strategy will work best for you to reduce your debt. The next step would be to compare your debt to your income. This will help you prioritize your spending.
Prioritize Spending
Once you’ve gotten a better look at your financial picture, you can see which areas you need to pay attention to most when it comes to spending. You should be covering your basic needs first such as housing, food, gas, etc. After that, pay at least the minimum on your secured credit lines. Then you can focus on your unsecured credit lines. While you have your financial picture in front of you, it would be a good idea to consider in your student loans as well. This helps you set up a strategy to pay off your debt.
Set Up a Strategy
There are three methods to paying off your debt known as the avalanche method, the snowball method, and the blizzard method.
- Avalanche Method
This method involves paying off the debts with the balances with the highest interest rate first. This is done to erase your debt as quickly and efficiently as possible. You would pay the minimum on your cards with the exception of the one with the highest APR. You would pay the minimum plus any extra you can afford on the highest APR. This is to eliminate the debt as quick as possible.
- Snowball Method
This method is similar to the avalanche method but it involves paying the cards with the smallest balances off first. You would make the minimum payments on all cards and any extra payment you can afford you would make on the card with the smallest balance.
- Blizzard Method
This method actually combines both of the previously mentioned methods. You would start by paying off the smallest balance first and then paying off the highest-interest balance.
If these methods don’t appear to help you, there’s always the option of seeking help in the form of a credit counselor. People can and do get out credit card debt. It just takes a little more effort than some are willing to put forth. In the end, the effort is a much bigger reward when you get out of debt.
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