Being in debt can feel suffocating. After being made redundant three times in two years, a credit card was my lifesaver – at the time. After the money had been long spent, all that was left was a balance and interest. Credit card debt is not uncommon. The good news is, you can make it manageable.
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When looking towards your future, there are ways of minimising credit card debt. You can commit to being debt-free with time and the right mindset. Having a positive money mindset is essential. Feeling in control of your future is a massive part of the process.
Firstly, stop spending money on your credit card
Ok, this one may seem obvious, but paying off debt whilst still racking up more debt is counterproductive. If you are going to be tempted, cut them up.
Determine how much debt you have
This can be a daunting process, especially if you have been avoiding the reality of how much you owe. It is essential to figure out how much debt you have to create a plan of attack.
Budgeting
You will also need to determine how much money you need to pay your monthly mortgage, utility bills, insurance, child care, car payments, travel costs, and food. There are so many tips on how to budget for your household.
Emergency fund
Don’t forget to put a small amount of cash aside each month into your rainy-day fund. As much as you need to pay off your debt, if an unexpected bill arises, you don’t want to have to resort to your credit card.
Start paying
Ideally, you need to pay off more than the minimum required. There are a couple of strategies here. If you have more than one card, you could pay off the one with the highest interest first – whilst paying the minimum on the others. Until it’s completely paid off. Or, some people prefer to start with the one with the highest or smallest debt. Once this is done, you can move onto the next card.
Consolidate your debt
Sometimes it’s best to reduce your credit card debt by consolidating. This will mean you save money on the interest you are paying. It means that only one payment is going out monthly.
Consolidation is one approach to simplifying repayment, but it may not be the best solution for every situation. If you’re exploring ways to address qualifying unsecured debt, researching the Freedom Debt Relief program can help you better understand the debt relief options available and determine which approach best fits your financial goals.
Struggling to make the payments?
If the minimum monthly payments are more than your monthly income, you may need outside help. Calling the credit card company and being honest can work in your favour. Most have debt recovery programmes called a ‘Debt Solution’. It may be a fixed fee each month over a more extended time period.
Several Government-backed options can write off debt depending on your personal circumstances. Or can help stop interest and charges. You could also call Citizens Advice. If you owe more than £30,000 applying for bankruptcy might be an option.
Give yourself time to make progress
Clearing debt isn’t going to happen overnight. You will need to stay focused to become debt-free. You might feel like you are making very little progress at first, but it will all be worth it once you see the numbers reducing.
Get an accountability partner
Two heads are better than one. Everyone’s version of an accountability partnership looks a little different. It all depends on personality, connection and the goal. This person could help you brainstorm ideas on how to reduce your debt, identify daily, weekly or monthly steps to achieve this and check in on you frequently. Reach out to your existing circle of family or friends. If that is uncomfortable, look for local groups or online. Don’t forget to consider some of the best ways to save money when raising a family.
Learn to live below your means
You may also need to reduce other aspects of your spending. Become a savvy shopper, not buying on impulse or filling your weekends and spare time with free activities.
How badly do you want financial freedom?
There are many ways on how to pay off debt faster. Ultimately, you are the only person who can minimise your credit card debt. However, it is doable with dedication, discipline, focus and time. You can do it!
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