1. Believe that you can do it yourself.
Paying of Credit Card Debt requires self-belief and discipline. It is good that you realize that you have realized that you need to eliminate your credit card debt. You would be to succeed in eliminating it once you take steps to actively manage it. The stories of many people we usually read on different blogs are a testament to how it can be done. The first step is to measure your financial position and make a budget for yourselves.
Now if you find that despite your efforts, your financial situation continues to weigh heavily on you and you find yourself overwhelmed, it would be a good idea to seek help and support elsewhere. There are a lot of resources out there that can help, such as Chartered Wealth Managers.
2. Set goals.
Making a commitment to ourselves to deal with our credit card debt is one thing, but we need to do something that will make the commitment concrete. You need to set a date for when we expect to reach our goals. This will give us a roadmap against which to measure our progress. Goal setting is a great tool to ensure that we keep ourselves focused and headed in the right direction as we tackle our debt reduction program.
3. Create a debt elimination plan.
The quickest way out of debt is to stop incurring more of it while simultaneously paying off the loans you already have as aggressively as possible. While this may seem tough to you now, you can use some strategies to help you out. Debt consolidation or refinancing may be solutions in some cases, like taking a personal loan to pay off the credit card debts and paying the Equated Monthly Installments of the loan against the minimum amount due of the card you were earlier paying.
Transferring your debt from a high interest rate card to lower interest loan like personal loan will speed up the debt reduction process. But if you have spoiled your Credit history and are unable to get a personal loan this might not work for you. But don’t worry there are other ways for you which might not be as fast but still would help you to pay off the debt.
4. Prioritize paying off your debt as your primary financial goal.
A lot of people who’ve been able to pay off their debt have made sure that they stick to their priorities. These people have managed to avoid temptations that entice them to part with their money. In one case I cut all the card of my client to ensure that he does not use them any more.
Before you buy anything, I ensure that it’s something that I’ll be able to pay for by the end of the month, and if not, I simply avoid making the purchase. As for unexpected expenses, you must keep an emergency fund in a high yield savings vehicle to avoid having to use my credit card for such emergencies.
Tip: I keep my emergency money in an account that has an Overdraft Facility against a Fixed Deposit that offers a relatively higher return.
5. Measure your Progress.
When you & nbsp; start a debt elimination program, it’s a good idea to keep track of how your credit is doing. In fact, it’s wise to get a snapshot of your credit outstanding before, during and after you’ve worked on reducing your debt, in order to chart your financial progress. Tracking your credit score is one way to measure the success of your debt and credit management efforts.
Tip: Visit CIBIL website to order your credit reports to track your progress.
6. Celebrate your Success.
Just like with trying to lose weight, being way too restrictive about dealing with debt can end up backfiring when we end up “rebelling” over our self-imposed restrictions. How many of us have experienced falling off the bandwagon on occasion because of tough — sometimes unrealistic — rules that we impose on ourselves? Give yourself a break once in a while by treating yourself to simpler rewards when you reach certain milestones in your plan or debt reduction schedule.
7. Increase your income.
I think that it’s not enough to cut back. It’s best to apply a two-pronged strategy for living below your means: spend less but also try to earn more. If you can find ways to increase income, you’ll have more money to throw at your debt balance; there are many ways to earn extra income (start a side business, get a second job, learn how to invest well), which combined with a strong savings strategy, can accelerate your debt repayment.
8. Have accountability.
One of the most effective strategies that some people have employed is to make themselves accountable while trying to work on their debt. By sharing their stories with their spouse or friends they are able to receive lots of encouragement and support, thereby giving themselves the psychological boost to handle their financial issues. There’s strength in numbers, and I believe that you need to build a supportive community that can cheer you on and provide you with advice, ideas and even guidance to keep you focused.
For those who cannot do this, you can still help yourself by simply keeping a journal or diary that will track your progress over time. By keeping tabs on your progress and jotting down notes and ideas about your financial activities, it’ll be easier for you to measure and assess your status. All this can only help you stay on track.
9. Pay more than the minimum.
The lesson here is this: put as much money as you can afford towards expensive debt or anything that charges a high interest rate. The cost of debt can be humongous. By keeping a tight rein on the use of your card, you won’t allow your debt to run away from you. It’s particularly important to avoid feeding your debt balance because as it grows, the harder it is to control and manage. So before you use your card, already set some parameters. If you can’t afford to pay the whole balance off, try your best to pay more than the minimum in order to bring down your principal as quickly as you can.
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