According to CNBC, Americans have more than $1 trillion dollars in credit card debt. And if you happen to be in that number, there are a few steps you can take to reduce or eliminate your debt.
#1 Come to Jesus’ moment
Take time to write out each of your debts from the highest interest rate to the lowest. This way you can get an understanding of which credit card you want to tackle first. This also allows you to save money – in that – if you pay out the highest interest credit cards, you will save on interest payments, which can be very costly depending on the interest rates.
#2 Stick to a budget
If you really want to pay out your credit card debts, you have to make certain you stick to a budget. This does two things – it allows you to make certain that you are not overspending and also allows you to live within your means. Think about it, if you constantly overspend, you will not have extra money to apply to credit cards.
#3 Contact your creditors
Pick up the phone! Contact your creditors to determine if your interest rates can be reduced in order to save more money. There was a study that found that 3 out of 4 people who ask for a lower interest rate often get it. This is especially important for those whose credit score has improved since owning the credit card and those who have held the card for a longer period of time. While they are not required to reduce your interest rate, it can be done!
#4 Create additional streams of income
After you have listed out your creditors, stuck to your budget and contacted your creditors, you then want to list out ways to create additional streams of income. There are a few things you may want to consider: (1) working a part time job; (2) turning your passion into cash (3) review past tax returns for possible missed deductions or (4) audit your household expenses. After you have found extra money, you should then commit a fixed amount to your credit cards.
Lastly, remember, getting out of debt may take some time, so be patient with yourself and know that – all things are possible!
Remember, your choice, your future!
Kemberley Washington, CPA is the owner of Washington CPA Services LLC and an adjunct professor. She is the author of “The ten commandments to a financial healing” and “Are you wearing the BADGE?”
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