Credit Card Debt Haunting You? Here’s a 5-Step Plan to Eradicate It
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What’s scarier than war, climate change, and even death? According to a survey from Credible.com, millennials view credit card debt as the scariest thing in their lives. Yes, even more so than death.
Since Americans hold nearly $800 billion in credit card debt, is it really a surprise?
Here are some more stats* to make your jaw drop:
- 28% of Americans don’t pay their credit card bill in full each month
- Of those Americans, 48% admitted they haven’t paid it down in more than 2 years
- Nearly 29 million Americans carry credit card debt for OVER 5 years
The number 1 reason why Americans carry a balance? They simply need it to cover their day-to-day expenses.
Knowing this, if you have credit card debt haunting you, follow this 5-step plan to start feeling more in control of your finances.
1. Breathe in. Breathe Out. See What You Owe
This can be hard to do, especially if you’ve been avoiding it, but you need to know exactly what you owe.
The easiest way to do it is to pull a free credit report which will tell you all your accounts, including ones that have outstanding balances.
Credit Sesame can provide this for free and it only takes a few minutes to get the report. Plus it will provide recommendations on how to approach cleaning up your report, which will result in a better credit score.
(Bad credit scores can happen to anyone. We interviewed someone whose credit score took a dive when he opened a new credit card to save $16 on jeans. Read the interview here.)
2. Time to Stick to a Budget
If you don’t already have a budget, it’s time to draft one up.
Use the 50/30/20 Budgeting Rule to stick to how much you should ideally spend and save based on your income.
If you need a simple budget sheet, we’ve prepared one here.
3. Pay Off Debt by Not Thinking About It
Now it’s time to pay off that debt! While scary to think about, there’s a way to do it mindlessly but effectively.
Digit can help you.
This useful and genius app will automate your payments so you don’t have to think about it. Just link a checking account and their smart algorithm will determine small but safe amounts to withdraw to send directly to any major credit card company.
Plus, regular savers will get a 1% bonus every three months, which is almost like free money towards your debt pay off.
You can withdraw your money at any time you need and it’s free to use for the first 30 days. After, it’s just $5 a month which is a small fee to pay for peace of mind debt payoff.
4. Quit the Plastic for Awhile
Consider ditching credit cards temporarily until you’ve paid off your credit card debt. Lock them away, as canceling cards might lower your credit card score.
Until you have a better grasp on your debt, having plastic around is too much of a temptation to spend without thinking. Let’s avoid spiraling into a debt abyss.
5. Get Personal with Debt Consolidation
If you need extra help, you might want to consider consolidating your debt.
This means you’re borrowing money at a low interest rate and using that money to pay off the outstanding balances from your high-interest credit cards.
If it sounds foreign to you, don’t stress. You can keep your research simple with Fiona, which is basically a marketplace of consolidation and refinancing options.
It’s free to use and takes only three easy steps to sign up.
Fiona will search all the top online lenders to get you the best personal loan anywhere between $1,000 and $100,0000. And loan lengths can last 24-48 months depending on the lender.
Not only will they help with debt consolidation, they can help with any big moment in your life that you may need a personal loan for like Home Improvement, Wedding, Medical bills and more.
*Statistics from CreditCards.com
