Yippee! I just paid off a credit card! I was caught by surprise by big financial hits (unemployment and expensive medical bills) that used up my savings and left me paying off credit card debts long after I found a new job. I designed my own strategies to get out of debt faster and it's paying off! Here are the strategies I used to get out of credit card debt.
- Keep track of your money. At the beginning of the month I withdraw enough cash to pay for groceries and everyday expenses until my next paycheck. I look at my account balance on my bank receipt and write down my current balance at the top of a blank page of paper. As I pay off each bill I deduct the amount of the bill from my balance. By keeping track of my monthly expenses I know how much money I have and when I see some bills, such as utilities, are smaller than the previous month I use that saved money to make higher credit card payments.
- Pay attention to unexpected expenses on credit cards. A magazine subscription that I was not interested in renewing automatically renewed and was charged to my credit card. I went online to cancel the magazine subscription and got a credit of over $20.00 applied to my credit card. I have also gotten a fee removed from my credit card when I didn't receive a credit card bill and the company tried to charge me a late fee. I simply called customer service and explained that I always pay my bill on time and I did not receive a bill.
- Prioritize your credit card debts. I had multiple credit cards to pay off so I paid off the credit card with the highest interest rate first. I am paying off a smaller balance on a second card next just to eliminate that bill. Now I can focus my attention on paying off the one remaining credit card.
- Credit card minimum payments are designed to keep you in debt forever because you still have all that interest adding up. Get out of debt faster by consistently paying a set amount above the minimum. For example, if my minimum payment is $25.00 a month on a credit card I made a point of paying at least $75.00 a month on that card. This pays for the balance minimum, the interest and some of the original balance on that card.
- Cash in your credit card cash back rewards to pay down your credit card balance. I have over $40.00 cash back rewards on one card. That $40.00 deducted from my credit card balance is $40.00 that I won't be paying interest on.
- Make plans for your money after your debt is paid off. It helps keep me motivated to pay off my credit card debt faster knowing that once my debt is paid off I can spend my money in more rewarding ways, such as building up my savings while having enough money left over for fun purchases like cute shoes.
For more tips on smart money strategies pick up a copy of The Cheap Diva's Guide to Frugal and Fabulous Living: How to Shop Smart, Look Your Best, Decorate with Style, and Have Fun for Less Money! , available in print or a Kindle ebook.