Getting out of credit card debt is a hard thing to do. But your debt should be seen as an emergency that needs to be taken care of so that you can move on with your life. If you’re ready to commit to becoming debt-free, here are five things you’ll need to do to knock out those credit card balances as quickly as you can.
Collect all your bills
You’ll first need to know where you stand with all of your creditors. If you have high credit card balances, you may be avoiding looking at the big picture due to shame or fear. This is completely normal, but if you want to get out of debt, you’ll need to know what you’re up against. Make a spreadsheet with your total outstanding balance, interest rate, and annual fees for each card.
Create a plan
Now that you have the whole picture, it’s time to create a plan to become debt-free. There are a few popular strategies for paying off credit card debt, but the snowball method is a great starting place if you aren’t sure what to do. The snowball method focuses on knocking out your lowest balance first to keep you motivated while you work to get out of debt. It’s a simple but effective method to use, especially if you need quick wins to stay on task.
Adjust your budget
Your budget will need to adjust so that any “extra” money is paid directly towards your credit card balances. You may need to cut back on non-essentials like new clothes or even daily coffee runs during this phase. It will be difficult to break from routine, especially if you feel like all the fun things are being taken away, but it’s only temporary. Focus on the greater goal of being debt-free and remember that when you are you’ll be able to use the money that was previously spent paying off credit cards to do the things that make you happiest.
Increase your income
There are many reasons people end up with large amounts of credit card debt, but the most prevalent is that they’ve spent more than they’ve earned and need to use credit cards to bridge the gap. Now that you’ve got a goal to get out of debt quickly, it will help if you can bring in more money that funnels directly to your credit card balances. Start a side hustle, sign up for gig work like Uber or TaskRabbit, or sell off the things you no longer use. Whatever you decide to do, don’t see this additional income as play money or for the occasional meal at a restaurant because you’ll be back to square one. If you want out of debt now, you need to see that money as untouchable except for paying off your credit cards.
Change your spending habits for the better
As you move through these steps, you might be worried that you’ll end up back in this situation eventually. Becoming debt-free may indeed take a few tries, but that doesn’t mean you shouldn’t try. If you want to make it last, you’ll need to rethink how you spend money and the way you use credit. Impulse purchases may give you that quick dopamine hit, but the repercussions that come along with excessive spending will keep you stuck in this hole for years.
Change your mindset to see how much your time is worth and look at your purchases from that perspective. Is that shiny new thing worth the three hours you’ve had to work to earn the money it will cost?
Finally, stop seeing credit cards as extra money. If you cannot pay your balances in full every month, you’ll accrue interest on the balance, and paying interest just means you’ve increased the cost of your purchases with no extra benefit. Suddenly, that credit card becomes an income stealer.
Stay the course
Remember that you can do this! Think of how great it will feel to be debt-free and all the new possibilities you’ll have with the money that you were putting toward credit card debt. Keep your end goal in sight at all times and keep putting a value on your time. You’re worth more than this debt, so get rid of it as quickly as possible.