Credit card debt affects millions of Americans, and repaying it can make you feel like you have to adopt an all-or-nothing mentality. Although debt does take up a good portion of your finances, it doesn’t have to consume your life or ruin you even more financially. In fact, with some planning, you can learn how to pay off credit card debt fast while saving money.
Tuck Associates believes in achieving financial independence as you pay off your credit card debt. By saving money, budgeting your monthly income and finding ways to repay debt quickly and efficiently, you can recover from debt and begin to live financially free.
Start With a Savings Plan
To get a clear perspective on how much money you truly have available each month, take a look at your last three bank statements. Non-negotiables should be deducted first; rent and car insurance, for example, should always be factored out first.
Next, you should look at essentials and consider ways to save. Could you start buying the cheaper store brand of your grocery staples? What about buying in bulk and saving more? There are often ways to cut back and save money just by buying cheaper brands or rationing portions until you can afford to use more liberally.
Finally, calculate your spending budget. How much are you putting toward recreation and entertainment each month? How much money is left after you cover all your essentials? In many cases, this can be halved. Approximately 30 percent of this amount can go into savings while 70 percent contributes to your debt repayment.
Tackle the High-Interest Balances First
If you have any cards with a high-interest rate, these are the ones you want to pay off as soon as possible. Repayment plans aren’t the most helpful with high-interest rates unless you’re able to contribute a significant amount each month. In many cases, people wind up paying an endless cycle of interest because they can’t afford more than the bare minimum.
Pay more than you can each month with high-interest cards so the balance and final amount due can be paid off as soon as possible.
Consolidate When You Can
If you have a way to consolidate student loans or other types of debt, do so. Tackling any private loans first is the best way to avoid the interest trap, and you’ll be able to focus more attention on your outstanding credit card debt when you have fewer loans and other bill payments to worry about.
Stay Motivated
Remember that repaying debt takes time, and it’s important to motivate yourself along the way so you don’t feel like you’re trapped in a never-ending cycle. Without any savings and rising bills, debt can make people feel hopeless and like their lives have no meaning. This is not true. Although it may take years to be completely debt-free, you can find ways to benefit from your progress and acquire stability in the meantime.
Plan for the short and long-term future; while living without any credit card debt is the ultimate goal, what are some goals you could set for the next month? Making smaller goals will help you stay motivated to keep paying and working toward greater financial freedom.
At Tuck Associates, we can help you tackle low interest rate credit card debt and start keeping the money you earn