May 22, 2015
Are credit card interest payments weighing you down? You’re not alone. Nearly , but nobody likes talking about it. According to a survey by the National Foundation for Consumer Counselling (U.S.), to admit the balance on their credit cards than their age or weight. Our goal is to get rid of this stigma so that we can start dealing with the problem. It is time for a debt plan.
Taking an honest look at your financial situation and making a debt reduction plan to reduce your card debt could save you thousands over the long run. More and more Canadians find themselves in a cycle of paying off credit cards with whatever cash is available, and incurring additional debt to pay for other expenses. Fortunately, creating a debt reduction plan does not need to be painful. With these tips, you can create a credit card debt reduction plan in 10 minutes or less.
We love ’s “” spreadsheet as a tool to help reduce debts and get a clear view of your finances. Download it to follow along with the next steps:
#1:Lay out your monthly budget
In the“Budget Pie” tab of Money After Graduation’s spreadsheet, input your monthly income and subtract your rent or mortgage payments, as well as an estimate of monthly expenses such as utilities and groceries. This tool provides a great snapshot of your budget and current financial situation. To get you started, look for areas where you can cut back, then take the money you’ve freed up and apply it to paying down credit cards.
#2: Get a clear view of your debts
Next, go to the “Debt Buster” tab. Input the balance amount, interest rates, and monthly payments associated with credit cards, auto loans, personal loans and other high cost debts. It’s most effective to focus on paying off your higher-rate debts first – typically your credit cards. If you carry a balance on more than one credit card, make sure you always pay at least the minimum on each card.
#3: Make a plan to reduce debt and consider consolidating your debt
Now is the time take action to reduce your credit card debt. The process of reducing debt can be simple. The most direct route is to lower your expenses and allocate more cash towards paying down higher cost debt. Another option is to check if you can refinance your higher rate debt with a lower rate . It could save you thousands in interest!
There are many benefits to debt consolidation loans. With a lower overall interest rate than the combined rates on your credit card debt, you can reduce monthly payments and save money. Borrowell loans also provide a clear timeline on when you’ll be debt-free. You’ll pay off the whole amount of the loan over the 3 or 5 year term – or even sooner if you decide to make extra payments, which you can do without any early repayment fees. If you do consolidate, keep in mind that it’s very important to control your spending to avoid racking up new debt on top of the debt you’ve just consolidated.
You are now on your way to being credit card debt free! Do you have any tips that helped you on your journey? Leave them in the comments below!
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