YOUR JOURNEY TO FREEDOM FROM CREDIT CARD DEBT
Feeling like you are buried under crazy amount of credit card debt? If yes, then this blog might be an apt metaphor for your worries. Start your journey towards a life free of credit card debt with the help of these practical ways to pay off your dues.
How Much Can You Pay?
The first step to paying off your debt is to calculate how much you can afford to pay on your credit card debt each month. Having a monthly budget is the only way to know how much you can afford to pay on your debt and then monitor your budget regularly to help you stay right on track. If you don’t already have a budget, now is a good time to make one.
Put Your Credit Cards On Ice:
Getting out of debt, asks for taking those credit cards out of your wallet so you’re not tempted to use them. Lock them or freeze them, until all of your unsettled payments are being paid. Paying with cash instead of card will help you (i) separate your needs from wants and (ii) before spending money will make you think twice.
Trim Your Expenses To Free Up Some Cash:
One way to speed up your debt repayment is by reviewing your monthly bills and looking for openings to cut your costs. Start by tracking your expenses that where your money is going and see if you can find more ways to save some money.
Lower Interest, Increase Payments:
Say that the interest rate on your credit card is too high; call the credit card company to negotiate lower interest rates on your credit card; they may pass you up to a manager who is authorized to negotiate lower rates. The company may lower your cards interest rate or delay your fees to help you catch up and pay off the debt. With lower APR, more of each payment you make goes to principal repayment, rather than accumulated interest charges. Creditors more likely negotiate lower rates with you if:
1. You’ve been a loyal customer who pays on time over many years.
2. Your credit score is higher than when you applied for the card.
3. Your balance is current right now.
A major mistake that most people make when paying off credit card debt is that they don’t stop making new purchases. If you’re dumping water into the boat at the same time you try to bail it out, you’ll never get anywhere.
The Right Strategy:
Here are the two best methods for paying off your credit cards debt.
- Debt Snowball: In this method you pay your smallest debt first, and then pay your next smallest balance. The first balances are easier and quicker to pay off. For example, if you have two credit cards, one with a PKR 40,000 balance and the other with a PKR 20,000 balance, you’d pay off the PKR 40,000 card first. This method feels the best; you get to experience speedy and significant success on your way to debt freedom.
- Debt Avalanche: How the scary sounding ‘debt avalanche’ would lift you out of your debt? In this methods you pay off the debt on the card with the highest interest rate For example, if you have two credit cards, one charging 10% APR and the other charging 18% APR, you’d pay off the card that charges 18% first. You won’t experience the same peace of mind and satisfaction as you would with the debt snowball, but it will save you money in the long run.
Which method should you use? Choosing between these two can be tough. If you are interested in saving money in the long run, start with the debt avalanche method. Or, if you want to clear some credit card debts quickly, choose a low balance to start out with. The big-picture goal is to pay off your debts,
Use An Emergency Fund To Fall Back On.
Work towards building an emergency cash fund which you can utilize if an unexpected situation arises. If you don’t build one and say you crash your car then you’ll once again have to hand over your credit card and watch the debt increase. Even a small emergency fund will cover little expenses that come up every once in a while.
Rest assured these guidelines can help you save you money and can help you pay off debt faster. Good luck friend you will need it!!!!!