7 Ways to Get Out of Credit Card Debt
- January 5, 2021
- For many of us, credit card debt is a fact of life.
- A recent study found that 3 in 5 Americans (61%) are in credit card debt, owing an average of $5,875. In addition, 23% say they go deeper into credit card debt every month and 14% say they’ve missed a payment in the last 12 months.
- If credit card debt is causing you financial stress, or is stopping you from pursuing your financial goals, it could be time to take action. As a good way to start getting a handle on credit card debt, see the suggestions below.
Here are 7 Life Hacks to get out of credit card debt:
1. Take a “snapshot” of your financial picture.
Start by assessing your current financial situation. It doesn’t have to be a complicated process, the important thing is to start! One suggestion is that for 30 days, track your income, expenses, and identify areas where you can cut back. Once you have the 30 day snapshot of your finances, see where you can take money to allocate as much as possible towards paying off your credit card debt. This basic budgeting approach will help you gain control over your finances and allocate more funds toward debt repayment. Many of the people we talk to find it helpful to track each and every dimetrack each and every dime you spend. Keep your receipts. Log payments in a notebook. After you understand where your money is being spent, then you can look for ways to cut costs.
2. Cut out discretionary expenses until you get out of debt.
You may need to make some short-term sacrifices so you can direct as much money as possible toward your credit card balances. Cut back on eating out. Avoid going to concerts or the movie theater. Take a vacation close to home, or even consider a staycation. If you have cable or satellite TV, you may be surprised how much you can save if you call and try to negotiate a better rate. It can seem painful to cut the things you enjoy, and if that is outside of your comfort zone, then it might not be a good suggestion for you. Try to stay focused on your long-term goal, and find creative and inexpensive ways to replace more costly non-essentials.
3. Look for ways to earn extra income.
Have you considered getting a part-time job? You may be able to find part-time weekend or evening work if you think you can juggle two jobs. Or you can consider non-traditional activities such as becoming a mystery shopper. Seriously, opportunities like this do exist. Market research companies pay consumers to perform shopping assignments and report back on their experiences. Reputable market research companies will never ask you to pay any money up front to participate. For more information, check out the Mystery Shopping Providers Association website. The additional income can be directly applied to your credit card debt, accelerating the repayment process. Look for creative ways to leverage your skills or pursue side hustles to supplement your primary income.
4. Call your creditors.
Talk to your creditorsTalk to your creditors to see if they will offer you any concessions. Tell them you are trying to pay off all of your credit card debt and need some assistance. They may be willing to lower your interest rate. Or put you on a short-term repayment plan. You won’t know until you ask. The point is to reach out. Many creditors are willing to work with individuals facing financial hardship. Explaining your situation and demonstrating a commitment to repay can lead to more favorable terms, making it easier for you to eliminate your debt.
5. Talk to a credit counselor.
A reputable, non-profit consumer credit counselingcredit counseling organization like GreenPath will work with you free of charge to develop a budget, explore options for getting out of debt, and provide you with a customized action plan. You may be a candidate for a debt management plandebt management plan, for which creditors often lower interest rates, stop collection activity, waive late fees and waive over limit fees. Check out GreenPath or another member of the National Foundation for Credit Counseling. Your counseling session is free, so you have nothing to lose.
6. Develop a plan, set goals and reward yourself.
Set realistic dates for when you would like to pay off a bill. Post your goals where you can see them each day, and work to meet those dates. When you pay off a credit card or other bill, be sure to celebrate your successcelebrate your success. Treat yourself to some type of small reward, like a decadent dessert, dinner out or a night at the movies.
7. Look to the future.
Any idea lifted up in this blog post has to work for you, and your specific situation. Everyone’s financial situation is unique. So perhaps there are other approaches to explore. The point is to make the changes part of your regular money habits. After you are able to get out of credit card debt, make sure you STAY out of credit card debt and remember you are not alone on the journey to Financial Wellness. Implementing these best practices on an ongoing basis will help ensure that you enjoy a positive financial future.
We Can Help You With Free Financial Coaching
Remember, getting out of credit card debt requires commitment, discipline, and a strategic plan. You are not alone. When you connect with the trusted national nonprofit GreenPath Financial Wellness, you can tailor these ideas to your specific circumstances, to understand your options for your financial well-being.
GreenPath offers free financial counseling and education to support people in paying off debt. Our professional, caring coaches will explain your options, including paying off your debt on your own or using a Debt Management PlanDebt Management Plan. They’ll support you to develop a personalized spending plan that works for you.
Julie Rogier (She/Her)
With a multi-decade career in communications, Julie Rogier serves on GreenPath’s content marketing team. She has presented on financial wellness for groups including the 2021 and 2022 Financial Services Midwest Summit, and regularly writes about financial health and wellness for several publications including U.S. News and World Report.
“Everything went well with my experience with GreenPath. They were responsive and I didn’t have too many issues. I was happy and very satisfied with the outcome and the whole program. It was very good.”
Kennisha of Long Beach, CA via ConsumerAffairs.com
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