Post written by Cass Brooks
IN this age of austerity we have all had to tighten our purse strings from time to time in order to make ends meet, but what about those of us with mounting levels of credit card debts?
When you are in debt it can seem like a never ending cycle that causes both stress and anxiety.
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There are ways that we can help ourselves to get out of credit debt, but they do rely on us confronting the debt head on, which can be a difficult task.
Here are 3 tips that can help with our debts and ultimately lead to a stress free life.
[signoff icon=”icon-credit-card”]1. Transfer your balance
This is a great option for helping with single card or low amount debt. If you have maxed out your current card and are struggling with the interest rate repayments, then why not cut out the interest altogether, for a limited period, so that you can work to repay only what you borrowed – sounds like it couldn’t happen right?
Well it can happen and it is relatively easy to do. Balance transfer credit cards do exactly what they say, they take your existing balance and offer you a 0% interest free period, which can differ between companies, but is usually between 6 – 12 months. The benefit of this is that you will no longer be paying off interest and will actually be able to take chunks off your debts each month. This can also work if you have multiple cards with very small amounts of debts on each, these can be consolidated onto 1 card with 1 lender, making the payments and communication much easier for you. This is the easiest way to take control of your credit card debts and start to work at paying them back.[/signoff]
[signoff icon=”icon-credit-card”]2. Prioritise multiple card debts
There is no single, quick fire way to be debt free instantly which is what most of us want in reality. So we have to get creative with our debt and work on a payment plan that may take time. When we have multiple debts it can be very difficult to remember what we are paying and where the money is going to; making a clearly defined list of what we owe and the interest rates that are applied is a great place to start on our debt free journey. It is this list that will determine how long it will take to pay each card off and which cards to tackle first.
The list should follow this format, the highest interest card first and then working down to the smallest amounts and interest percentages. You need to be looking at paying the highest interest rate card off as quickly as possible, as this is the one that is costing you the most amount of money. Whether this card takes 6 weeks or six months to clear – this should become your priority card, make the minimum payments on the others. Then once this card is paid move onto the next and so on.[/signoff]
[signoff icon=”icon-credit-card”]3. Try to pay more than the minimum
I know this may be very difficult when struggling with debts, but paying only the minimum amount each month will mainly be going towards the interest and not the actual debts. This may require a planned out budget that will help you too see how you are using your money and areas that you can possibly save some cash. Knowing how we spend our money is vital to making sure we pay off our debts on time, the question we need to be asking ourselves is ‘do I really need that Latte on the way to work?’
Once you have decided where you are going to save some money, you can then start to up your monthly payments. This will not only pay off your debts quicker, but it could also help to keep your overall finances healthier.[/signoff]