Did you know that nearly 87% of families are in debt? That mind sounds like a really high number, but when you think about all of the unplanned expenses people often end up paying, you’ll realize how easy it is to fall into debt. A lot of this debt may come from school, cars, homes, and other large purchases, but sometimes people find themselves crushed beneath the weight of credit card debt. What may seem like small purchases that you’ll pay back later ends up as thousands of dollars owed. It may feel impossible to free yourself of this debt, but these tips to pay off credit card debt fast, you’ll be debt-free in no time.
1. Start Small
When thinking about how to tackle your credit card debt, you might feel overwhelmed by multiple lines of credit weighing down your neck. Of course, you might think that you should make all of your payments on time to avoid bad credit, which is a good idea. What many people don’t realize is that the first step in tips to pay off credit card debt fast is to pay off one credit card entirely. If you make this a priority, it can be done relatively quickly.
It is best to start with your credit card that has the smallest balance. Many people think that you should start with the credit card with the highest interest rate, but sometimes that simply doesn’t help enough. By eliminating a credit card completely, you will begin to feel a sense of accomplishment that will help encourage you to keep moving forward in your debt relief process. Often, credit card debt is a result of a pattern of bad habits rather than simply high interest rates. By completely taking a credit card away and paying it off, you can begin to move forward feeling like you are capable of getting rid of your credit card debt! This is one of the best tips to pay off credit card debt fast.
2. Try to Negotiate
Although many people are afraid of debt negotiation, it is a very important step when following tips to pay off credit card debt fast. It is true that debt negotiation can be a tricky and difficult process, but any compromise you reach with a credit card company could be worth it. After all, it doesn’t hurt to simply ask!
One good thing is that credit card issuers are aware that credit cards are an unsecured debt. While your car loan, your car could get taken away, and when you don’t pay your mortgage, your home could get foreclosed upon. Credit card debt does not work this way. Although falling behind on your credit payment could result in damaged credit and other consequences, these problems may not be as negative as others. When being faced with a financial crisis, credit card payments are often the first thing that people fall behind on.
Often, banks and credit card companies will value some form of payment rather than no payment at all. A lump-sum settlement occurs when you offer to pay the credit card company a large payment which is less than your balance. This has the potential to save you the most money, but it may negatively affect your credit if you settle for less than the amount due. If you simply want to close out the account and move forward, however, this can be a good option. People will sometimes pawn jewelry or diamonds to earn money to pay to credit card companies for a lump sum settlement! While this isn’t the ideal scenario, it can get you out of debt fast.
Many people are unable to negotiate a lump-sum settlement because they are simply unable to put together the funds for a big payment. In that case, there are still possibilities for negotiation. A workout agreement is when the credit card company lowers your interest rate or even halts your interest rate altogether for a period of time. They could also reduce your minimum payment is you are unable to pay the current minimum. While this may seem very appealing, keep in mind that this also has potential to damage your credit. However, paying the credit card payment at all is much better than failing to pay it altogether. When looking for tips to pay off credit card debt fast, it’s always important to understand that making these payments is essential.
If you have recently struggled financially due to the loss of a job or a change of finances due to divorce, you may be able to reach a hardship agreement with your credit card company. A hardship agreement is a temporary halt or change to lower your payments. If a credit card company feels that your financial setback is only temporary, they may even allow you to miss a few payments without consequences. However, every bank or credit card company handles hardship agreements differently, so you should ask your credit issuer what exactly a hardship agreement entails for you.
Although debt negotiation can be intimidating, it is something that can be extremely helpful to you when trying to pay off credit card debt. Although certain negotiations may not completely protect your credit score, they are useful in helping you pay off your debt as fast as possible. If you need help and feel like you cannot negotiate with a credit card company on your own, it is possible to hire a professional to help you. Debt settlement companies or credit counseling agencies can help you communicate with credit card companies to find a solution. However, these professionals do require payments, and they can be quite expensive. Try to communicate with your credit card company on your own first to see if you can reach an agreement. Don’t be afraid to tell them about the problems you are facing that are impacting your ability to settle your debt.
3. Create a Budget
One of the most important tips to pay off credit card debt fast is to make permanent financial changes to your life. The first step to freeing yourself from your credit card debt is to pay all of your credit cards off completely. This means putting as much money toward your debt as possible until you are debt free. In the time that it takes to pay off your credit card debt, you must be working and living on a tight budget. While this may be unpleasant for the time being, you will be much happier with your financial freedom after your debt is paid off!
First, look at how much you are earning at your current job. Determine how much of your income must be put toward groceries, bills, and other necessary payments. Then, determine how much you feel should be put toward “fun” expenses such as dining out or going to the movies. It is encouraged that you try to limit these excess expenses as much as possible until you are out of debt. Try to avoid being tempted by online shopping or going out with friends. Explain that you are trying to get out of debt and think about how much fun you’ll be able to have once you aren’t facing such heavy financial burdens!
Try to avoid big purchases while you are on a budget, but if you must, try to make responsible ones. If you are in need of a car, opt for a budget-friendly used car with low monthly payments rather than a brand new model. Some people even go to the extreme and move to a smaller, one bedroom apartment to avoid a pricey, more spacious home. Keeping monthly payments such as rent and car payments as small as possible helps you create good monetary habits that will help you get out of debt, but also keep you out of debt long-term. One of the biggest tips to pay off credit card debt fast is to develop good financial habits that last for the rest of your life!
4. Hustle, Hustle!
Although it may seem obvious, one of the most important tips to pay off credit card debt fast is to make as much money as possible. Consider that when you are in the process of paying off your debt, your sole focus should be getting out of debt. Where you may have spent your free time going out with friends or watching Netflix before, consider picking up a side gig.
Say your day job is working a nine to five at the accounting firm. Although it may seem like a lot, there is plenty of time leftover in your day to make money. Think about any extra skills or qualifications you might have. If you have serving experience, you could work nights waiting tables to help pay for your debt in tips. This can be especially helpful if you have a short timeline in which you want to get rid of your debt. Every bit of determination will lead you one step closer to a debt-free life! Of course, there are plenty of other job options such as being a cashier that can allow for you to have flexible hours to accommodate your day job.
If you’re having trouble finding an additional job, consider looking into driving for Uber or Lyft if you have a car, or maybe even becoming a delivery driver. Although you might miss your spare time to relax, think about how much faster you could pay off your debt and return to a relaxing, debt-free lifestyle! If you have an extra room, you could rent it on Airbnb and make extra money while staying at home! There are a lot of websites that you could list your abilities as a dog walker or babysitter.
It is important to always be ambitious when you’re paying off debt. One of the more obvious tips to pay off credit card debt fast is to make sure you’re earning a fair wage! The more money you make, the more you can put toward paying off your credit card debt. If you feel like you aren’t making enough money at your current job, never be afraid to ask for a raise if you feel like you deserve it. If earning more at your current job isn’t possible, put your resume out on the market and see what kind of careers are out there for you. Don’t ever settle for less than you deserve!
5. Don’t Fall Into Old Habits
Once you pay off your last credit card, you may feel like throwing a giant party to celebrate your newfound freedom. While a celebration should definitely be in order, try to keep your focus despite being free of the looming threat of credit card debt. America is a country that profits off of debt, and the path out of debt is a slippery one. Don’t fall into temptations of low-interest credit cards or large purchases with payment plans. Try not to buy anything unless you have the money to buy it outright.
Of course, there will always be unexpected expenses no matter how good you plan. Emergency room visits can rack up thousands of dollars in medical bills. Say a pipe bursts in your home, resulting in you having to call emergency plumbing service! How can you deal with these unplanned financial stresses?
The biggest key in tips to pay off credit card debt fast is to plan for the unplanned. It is essential that you create a savings account for emergencies. It is advised that at least 20% of your income should go into savings. While that may be more difficult as you are getting out of debt, try to build good habits as your debt starts to decrease. Start to gradually pad up your savings account as it becomes easier for you to devote more of your money to savings. By doing this, you are preparing yourself for unexpected expenses that would otherwise send you into debt.