The 7 Steps to Killing Credit Card Debt Forever

7 Steps to Killing Credit Card Debt Forever

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Step 1: Stop Making More Debt!
The first, and sometimes hardest step, is to get out of the mindset that debt is something that you need to survive. Banks, loan and credit card companies and stores all spend a huge amount of money marketing to you with the message that you need more stuff, and that stuff is the key to happiness. You need to fight this mentality and realize that the real path to personal happiness is instead financial peace of mind. Before you purchase anything, think to yourself ‘do you need it’, if not, don’t buy it. If you need it, is there a cheaper alternative? And always, always, always wait until you have saved the money for it, before you buy it. You’ve lived this long without it, you can do without it for a bit longer…

Step 2: Prioritize High Interest Debt
All debt is not created equal. High interest debt will be eating a larger hole in your pocket on a monthly basis than low interest debt. It may seem tempting to pay off an old debt instead or a small one first, but paying off your debt in order of highest interest rate is the smartest and quickest way to get rid of those credit card debts forever.
Make a list of the amounts you owe and the interest rates you are paying on them. Paying off the high interest rate credit card debts first can significantly reduce the amount of time you will be in debt and the amount that you need to repay overall.

Step 3: Don’t be fooled by 0% balance transfers
Credit card companies will often offer introductory offers on balance transfers to get your business. Take advantage of these to get some relief of the amount of interest you need to pay on your debt, but be sure to triple-check the terms and conditions so that you don’t get stung at the end of the introductory offer period.
Whilst a 0% interest rate may sound compelling, transferring your balance also runs the risk of having a negative impact on your credit rating. Be sure to check with your new financial institution if this is the case, or read the fine print carefully.
Moving from one credit card to the next to lower your interest payments is often just a band aid solution. To kill credit card debt the most important thing is to make long term changes in your spending behavior.

Step 4: The Budget
A budget doesn’t just let you know how much you can spend; it also offers you peace of mind that you’re on track to reach your goals. Being in control of your finances can lift a lot of the stress of being in debt.
Begin keeping a list of all your expenses. Decide what really is the most important to you and which more frivolous purchases can be cut back on. Make a weekly spend budget, and return to it on a weekly basis to see where you can make further savings. You may be surprised at how much you can save.
At the same time, add an amount to your budget which you can realistically afford for repaying your debt. $20 a week? $200 a week? Whatever you are able to consistently pay can quickly make a huge dent in your credit card debt. Above all, make your necessary payments first as soon as you get paid. Leave yourself only with your discretionary spend. That way you won’t be tempted to dip into money required for necessities.

Step 5: Making the Strategic Repayments
With your credit card debt laid out in order of interest rates its clear to see where your debt repayment money should be going. First ensure that all minimum payments are made, as fees can be high for missing a payment. Then pay back the credit card debt at the top of your list. This will be the most effective use of your debt repayment cash.

Step 6: Rewards!
Many people find that rewarding themselves for hitting debt reduction targets is a great motivator. Decide on milestones, and think of low-cost ways in which you can reward yourself for hitting those debt repayment goals.

Step 7: Don’t Beat Yourself Up
Somewhere along the road you will need to deviate from your strategic debt repayment plan. There will be an emergency – some unforeseen expense – which means you might not meet your weekly or monthly goal. The important thing is to not let these problems get you down and to get back on the horse as soon as possible.
Getting rid of credit card debt can seem like an impossible task, but after you move to low interest options, prioritize your repayments, and make a solid strategic budget, then you will find that it can be paid off in a much faster time that you may initially have imagined.