The average American has over $8,000 in credit card debt, some with much more than that. Whether your credit card debt qualifies as being below average, average or above average, here are five things you can do to take control of your credit card debt.
Make A Budget
The way you got into debt is because you spent more money than you earned. Simple as that. To keep tabs on where your hard earned money is going, you’ll need to make a budget to track your spending. Take out a piece of paper and write down your monthly income at the top. Then subtract all of your bills, credit card payments, food and other expenses. Do you have any money left over? If you do, that’s great but if not, you’ll need to find ways to cut back so that you have a balanced budget.
Put Away All But One Credit Card
While you are trying to get out of debt, put away your other credit cards so that you can’t add to them. Put them in a bowl of water and freeze them. Bury them in your back yard. Just do something to get them out of your wallet and in a place that makes you think twice before trying to use them again. Keep out one card, preferably the one with the lowest balance or the one that you’ve had the longest, to use for your purchases.
Make a Plan to Pay Off Your Debt
Now you need to make a list of all of your credit card debt which can be done in one of two ways. Both ways are worth considering; chose one and stick with it until your credit cards are paid off. The first method, and mathematically correct, is to pay minimum payments on all of your cards and then put as much as you can, above the minimum, on your credit card with the highest interest rate. The other option, which is very motivating, is to make minimum payments on all debts but put extra payments towards the credit card with the smallest balance. In this way you’ll eliminate individual debts faster and feel more successful.
Get A Loan to Pay Off High Interest Debt
If you have more than the average amount of credit card debt, you might want to consider getting a balance transfer credit card which offers a low or zero interest introductory offer. Pay as much as you can on it during the promotional time and then transfer to another balance transfer credit card or get a personal loan from your local bank. Depending on the amount of debt you have, this could save hundreds or thousands of dollars.
Get An Extra Job
If you are barely scraping by just living on a balanced budget and need more money to apply to your credit card debt, get an extra job or two. Temporary jobs are pretty easy to come by even in a down economy. You can wait tables, deliver pizza, get a newspaper route or walk dogs. Such jobs aren’t meant to be forever but the money you make will help you take control of your debt. As an added bonus, the more you dislike your temp job, the more motivated you will be to pay off your debt and stay debt free in the future.
Take time to follow these steps and you’ll have better control of your finances in no time. A year from now you could even be debt free and on the road to financial freedom.
Richard Towler is founder of Click4Credit, a leading credit card comparison website in Australia and now helps run a network of sites in the US and Australia. The sites help consumer figure out the best deals for their needs including balance transfer credit cards to considate credit card debt.