How to Work Your Way out of Credit Card Debt
- Jul 7, 2016
- 3 min read
Credit card debt is the dark shadow that follows you wherever you go. It’s there when you go to the store, shop online, apply for a loan, and it sometimes follows you home and causes a dispute about money management.
The truth is you’re no Peter Pan; that shadow isn’t going to fly away and ditch you one day for no reason. You’re going to have to work hard to get yourself out of debt. And no, there isn’t any pixie dust to lift you out of it.
Time to make a plan. Here’s where to start:
1. Reevaluate your needs vs. wants.
You need to pay rent. You need food. You need money for train tickets. You don’t need to but appetizers, drinks, dinner and dessert every time you go out. You also don’t need that first class ticket while you fly to that destination wedding.
Do plan for the unplanned, like that aforementioned wedding. Something is (seriously) going to pop up, and you need realistic numbers if you want to pay off that debt.
2. Build your budget.
Add up the costs of those needs you just determined and compare it how much you make at the end of the month. How much money is left over? That’s what you will be able to use to pay off your credit card debt.
Don’t forget to add space for the broken water heater, the Mother’s Day gift, birthday dinner, and new interview outfit. You know, the it-was-a-bad-month-because fund. Seriously. Something always comes up.
3. Make a plan to pay it off.
Bring the leftover number to the bank and meet with a banker (for free) to determine the best plan of action; they want your money back, too!
4. Pay highest credit card bill first.
Because interest is the reason credit card debt quickly gets out of hand. And your highest bill is the biggest culprit. Get rid of that sucker ASAP.
5. Track everything.
Some people do best using the ol’ checkbook method, others like excel sheets. Me? I use an app called Goodbudget so I can track what I spend as I spend it. Plus, this nifty tool is ideal for household because multiple people can enter their expenses into the same budget.
6. Review at the end of every month.
We would love it if all numbers were straight-forward, but budgets need a little give. Are you on-par? Where can you make adjustments? Empower yourself and make those changes.
7. Call the credit card company.
It might feel as though the credit card company is laughing menacingly as you struggle to pay off your bills. Mwahaha. They’re likely not; but they sure don’t mind the extra interest you’re accumulating.
If you are really struggling, there are some instances in which they will help. The only way you’ll know is if you give them a call. Just know what the implications of your credit score might be…hint: it won’t be pretty, but not one said the process was going to be glamorous.
Yes, it’s going to be hard. Yes, that large number is daunting and it feels like you might never get it down. But that doesn’t change the fact that you need to make these changes.
You can’t run from credit card debt, just like you can’t deny that ginormous piece of cake you ate last night even though you’re on a diet. You can, however, put in the time and effort and get yourself into a healthy place financially. Now get to it!
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Jackie Vermeulen is the founder of The Career Mint. She works closely with mentors and some off-site experts to address the hard-hitting career topics in articles like the one you’re reading now.
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