My mother used to say credit cards were a necessary evil. To me, they almost seemed like a trap: a way to suck you into a quicksand of debt with no way to crawl out or wade your way through the treachery. When I was a college student, I decided to become a financial advisor so that I could help people navigate their way through financial difficulties and get back on to the path of financial prosperity. I had seen my mother struggle for many years to pay off her credit card debts, so I felt it necessary to help others who struggled with those same problems. If you're attempting to pay off your credit card debts sooner rather than later, here are five helpful tips to help you along in your endeavors.
Pay with cash, not credit
If you don't see money physically leaving your wallet, chances are you aren't going to know it's dwindling away penny by penny. Credit cards are efficient, yes, but they can get us into trouble. By withdrawing money and purchasing things with cash, you'll have a better grasp on how much you have to spend month to month. I withdraw money from every paycheck and divide the sum into individual envelopes, such as grocery money, shopping money, date-night money, etc. By allocating funds into individual envelopes, I have a better grasp on how much I'm spending every day.
The rise of online banking is spectacular. Long gone are the days of writing out checks and mailing them off. Nowadays, you can log into your online account and send payments directly; yes, it's that easy! One of the wonders of this technology is that you can send micropayments as many times as you want. In fact, I often make micropayments on my credit card with whatever extra money coming in, whether it's from a garage sale, freelance work, or side work. By reserving this extra money to pay off credit card debt, I'm able to make much more headway than I would if I had used the money on frivolous purchases.
Only paying the minimum amount due is a form of denial. Sure, debt collectors won't be banging down your door if you are making consistent, minimum payments, but you're certainly making the process of paying off your credit card debt much more arduous. Even if it's as small as ten or twenty dollars extra, go ahead and contribute more than the minimum amount due. You'll be doing yourself a huge favor in the long run.
Pay off your smallest debt first
Part of being able to successfully pay off all your debt is knowing that you can. A great way to psychologically affirm this to yourself is to tackle your smallest credit card debt first. When I signed up for a Victoria's Secret credit card in college, I racked up over $300 in charges. At the time, I was also trying to pay off my $1,500 credit card debt that I had foolishly charged up as well. I remember reading in a financial advice blog that the most important thing a person can do to conquer all their debt is to pay off the smallest one first. Sure, it sounds like a weird mind trick, but it worked, and that's all that matters.
Look over your purchase statements
One of the main reasons people accumulate too much debt is because of their poor purchasing habits. Sure, we all come across things we think we can't live without from time to time, but there is no excuse for putting you and your family in financial jeopardy because of your impulsive, materialistic desires. Whenever you get your credit card statement, look it over and study what your purchasing habits are. Do you spend too much on dining out, clothing, entertainment, and other miscellaneous items? By understanding what your spending habits are, you'll be able to identify how you can cut down on those frivolous, unnecessary purchases.
Nobody likes talking about credit card debt, but it's a discussion well worth having. Use these five tips to help you and your family do away with credit card debt once and for all.
Eliza Morgan is a financial advisor, freelance writer, and blogger. She writes for www.businesscreditcards.com where she specializes in giving advice to small business owners.