Stressing about credit card debt can have a significant impact on your overall well being and outlook on life. According to an American Household Credit Card Debt study, the amount of credit card debt owed by US consumers in the third quarter of 2022 was $925 billion. If you desire to accumulate wealth, debt is the first area to target and eliminate to free up income.
So what are some ways to get out from under credit card debt?
Pay off cards with the highest balance first
Start by listing your debts from the highest interest rate to the lowest. Pay the minimum amount for each debt and direct all extra cash towards the debt with the highest interest. After this debt is retired, focus all the extra payments on the next highest interest rate, and so forth. This “debt snowball” aptly named by finance radio talk show host, Dave Ramsey, creates more momentum than trying to make payments above the minimum on all cards.
Cut Them Up
This repayment plan only works if you stop charging. So cut up all cards except for one general credit card, like a Visa or Mastercard.
Develop Spending Plan
Whether it’s overspending or an unforeseen health issue, creating a realistic budget to account for regular and irregular expenses can help protect you from using credit cards to make up the difference. Controlling non-essential costs such as eating out and going to the movies will free up extra income for upcoming expenses.
