4 Step Plan To Eliminate Credit Card Debt
These four steps to pay off and eliminate the credit card debt which is dragging you down emotionally and financially, will send you on your way to becoming a more independent, happy, and free person…
The emotional burden of too much debt will overtake you, slowly at first, and then build until it is almost all you think and worry about.
Unfortunately it is very easy and tempting to borrow using a credit card with its low minimum monthly payment. The problem becomes… if you choose to make just the minimum payments, it can take many, many years to pay it (them) off with interest. The comparative high interest rate that you pay for credit card purchases will cost you dearly in the end… all because you had to have it now and couldn’t wait until you saved the cash, or live within your means. Too late now… let’s fix it…
Based on an analysis of Federal Reserve statistics and other government data, during 2013 the average household owes $7,084 on their cards; and while looking only at indebted households, the average outstanding balance rises to $15,185. The average credit card interest rate today is 17%.
1. YOU MUST REALLY WANT TO GET OUT FROM UNDER
Stop using your credit cards. Period. Use cash instead when you have to.
You must really want to get out of debt! You must buy-in to the notion that a tremendous emotional burden will be lifted off your shoulders which will bring unimaginable relief and happiness. It is important to visualize in your mind how nice this will be, and absolutely convince yourself that you WILL get there. It may take awhile, maybe even a long while, but you will get there. Know that once you are free from this credit card burden, you will be a significant step closer to being in control of your own life and less dependent upon every cent of your paycheck.
2. PAY OFF CREDIT CARD WITH HIGHEST INTEREST RATE
Look at all of your credit cards and check to see which one of them carries the highest interest rate. Whichever one it is, this is the one you will work on first. Pay the absolute highest amount that you can afford each month on the highest interest rate card while paying the minimum on all your other obligations.
3. PAY DOWN CARD WITH NEXT HIGHEST INTEREST RATE
Once you have paid off the highest rate card, and after you celebrate, then choose the next highest interest rate card and pay that one off next, while paying the minimum on the others. Keep on until you have finished! The process itself will actually make you feel pretty good about yourself while you see the balance coming down, little by little. It is not only financially sensible, but when you apply a larger payment to the highest interest rate debt, you will see noticeable results each month – which in turn helps to keep you motivated.
4. KEEP ONLY ONE CREDIT CARD FOR EMERGENCY
Once you have paid off all of your credit card debt, cut them up and cancel them except for one. Keep a single credit card that has no annual fee, and the lowest interest rate. In today’s modern world you need a credit card to do certain things like rent a car, make hotel reservations, etc…
Years ago I paid off all of my cards and closed out the accounts. I then went to the credit union and obtained a secured card, because that way I was providing my own credit and no one could do anything capricious or arbitrary to my account. If you put ten grand in an account, you will get a 7,500 dollar credit card. If you put more in the secured account you can get more credit. I now have two cards, and they are treated just like a regular unsecured card by the credit agencies. Little Ancona has a card she opened as well, and as a teenager she has better credit than most adults I know. If you can’t afford to put that much down, the smallest limit is one grand which requires a deposit of 1,500 bucks. The cash still earns interest and it is still yours. If an emergency comes up and you absolutely have to have the money, simply close the account and take it.
I figure if you don’t have a few grand to put away to create your own credit, then you probably shouldn’t have credit cards in the first place, that you should focus on saving more money and learning to live on less than you make.
Another thing to remember is that, when making payments on credit cards, interest accrues monthly. Depending on the size of the balance you might be able to pay it off, but if you’re not careful that balance can continue to get bigger and bigger. Many banks can offer you a loan with a lower, fixed interest rate. This allows you to get the balances off your credit card so you don’t owe more and more money, and making often times lower, simpler monthly payments until that debt is gone.
I’m sorry to disagree with the concept that credit cards are bad but most people are just wrong. The only thing bad about credit cards is that your purchases can be tracked. While this is a bad thing most people just talk about the interest and the banks taking advantage but that only happens if you carry a balance. I use credit cards all the time and accrue points that I use for vacations and other things I want like the books on gardening I just received free from Amazon because I accrued enough points on that card to purchase them. Credit cards are a form of payment just like cash,checks,change ect,it is how you use them that matters. If you stay within your ability to pay them off each month you receive free money that again can be used to purchase things to help you prep. Its not the cards that are bad it is the mind set of the people that use them.