Many people are facing heavy debt these days. There are many reasons why people end up finding themselves drowning in debt, especially credit card debt. It seems to be easy to get yourself in credit card debt but never seems that easy to get out of debt. The good news is that you can get yourself out of credit card debt. It does take some time and effort on your part, but you can find yourself debt free and maintain your debt free status.

Think of what a great feeling it would be to not have to owe any money to your credit card company. Unfortunately, credit card companies have set up their cards so that you get yourself caught in credit card debt without being able to find a way out. If you continue reading this article, you will find all the ways to get rid of your credit card debt once and for all.

What Is Credit Card Debt?

Before we can have a real discussion about how to get rid of credit card debt, you need to have a true understanding of credit card debt. Credit card debt is what you accrue when you use your credit cards. Credit cards are backed and funded by a bank or credit union. The bank has agreed to allow you to borrow a certain amount of money in revolving credit.

You can use this money in any way you want, but you cannot use any more than your allowable limit. You must pay back the money you use by making at least the minimum payment each month. As you make payments, that money becomes available for your use. The credit card company charges you interest on the money you borrow. Credit card companies provide you with a grace period before the interest accrues. If you pay off your credit card in full each month, you will not have to pay interest.

How Did You Get Here?

If you really want to know how to get rid of credit card debt, it is important to understand how you got here. Many people that have credit cards do not understand how they work. They do not understand why they have to pay interest or fees.

• If you do not pay your credit card on time, you will have a late fee.

• If you do not make at least the minimum balance payment, you will have a fee.

• If you go over your allowable limit, you will have to pay a fee.

• When you do not pay your balance in full each month, you have to pay interest, which is basically like a paying a fee.

Not only will you have to pay fees, but you will negatively impact your credit card. Even when you pay only the minimum balance on your credit card each month, it is not enough to reduce your debt or get any closer to paying off your credit card. To illustrate the point better, here are numbers:

Do you see how you are not really getting anywhere? Now, imagine this same scenario, but you are using your credit card every month. Paying only the minimum amount is how your credit card debt gets quickly out of control.

Take a Hard Look at Your Finances

Now that you know how you got into debt, we can focus on how to get rid of credit card debt for good. First, you need to take a look at your finances. You cannot understand the amount of debt, savings, and cash you have until you take a deep dive into your finances.

Create a List of All Your Debts

This list must include your credit cards and any other bills you pay each month. You want to make a note of the balance, the percentage rate, and how much longer you have to pay it (if it is a loan or some other debt that has a term).

There are a few debt strategies you can use to pay off your debt. You also want to understand your income. Your income includes any month that you have coming in on a regular basis. When you spend more than you earn, it can also lead you down a dangerous path to debt.

Budget!

The best way to know how much money you have to put towards your debt is to create a budget. Now that you have written all your debts down, you know how much you have to pay off to get yourself out of debt. This is the goal you want to work towards. You must create a budget with the total debt in mind to give you an idea of how long it is going to take you to pay off your debt. Not only will this put you in a good place to become debt free, but you can also put yourself in a better financial position. Once you pay off your debt, you have created sound financial habits. If you can maintain them, you can keep yourself out of debt and begin to save a large amount of money.

On your budget, you should create three columns:

1. One column is for the money you spend each month. You want to include all the money you spend, including credit card bills. You want to include food, gas, and coffee. Any money you spend on a regular basis must be included.

2. In the next column, you want to write down all the income you have coming in each month.

3. In the third column, you want to put the items from column one that are debts you want to pay off, debts that, once paid, you will no longer have to pay. This third column contains the amount of money you have to pay off.

Get Your Spending Under Control

Once you begin to understand your bills and your income, you can really look at the amount of money you are spending. When you are working towards paying all your debts (the amount in column three), you must take a hard look at your spending column to see where you can reduce your spending. For example, any money that you no longer spend on items such as lunch, you can put towards your debt. While it may seem that choosing not to buy lunch out may not save you a lot of money, over the long term, it does.

Think about it this way:

Lunch may cost $12 per day. You eat lunch out every workday, five days a week. That is 5 x $12 = $60.

You are spending $60 per week, which is $3120 per year. $3120 is a lot of money; it could be enough to pay off a bill. You could make your lunch and take it to work with you and save a good deal of money. The same is true for coffee. Many people buy coffee out every day. If you go to a coffee shop, you could spend anywhere between $2 to $5 per cup of coffee, depending on what you like to drink. That could be a total of $730 to $1825 per year that you could redirect to your debt.

Select a Strategy

There are several different strategies that you can use to pay off your credit card debt. One may work better for you than the others.

1. One strategy is looking at all the debts you have and write them in order by interest rate. You can pay off the debt with the highest interest rate first. Then, you pay off the debt in order of highest to the lowest interest rate. Next, you pay the minimum amount on all your other debts and then pay as much as you can on the debt with the highest rate. Once that debt is paid, you move to the next one and move down the list until they are all paid.

2. Another strategy is to list all your debts by how much you owe the lowest amount to the highest amount. You pay off your debt with the lowest amount first. Then, you make the minimum payment on all the other bills and put all your money towards your debt that has the lowest balance. This particular strategy allows you to pay off your first debt quicker and gives you a sense of accomplishment by paying off a debt.

3. Another method is a combination of the two above. You first select the debt with the lowest balance and pay that. Once that is paid, you move to the debt with highest interest and pay that off. Then you move to the next debt that has the lowest balance. You go back and forth until all your debts are paid. Keep in mind while paying off these debts, you must dramatically reduce your spending and do not use your credit cards.

Create Strong Financial Habits

All of these suggestions are working to pay off your debts as well as creating better financial habits. Earlier in this article, we mention how you tend to get into debt, and mostly it is spending more money than you have. It is essential that you work on creating better spending and saving habits.

Most of us are never taught how to save money. Most of us are never taught how to use credit cards properly and in a smart way. Smart financial habits are learned. You do not just know how to make sound financial decisions. While you are paying off your debt, you are teaching yourself better habits.

Need Help?

None of this is easy. It takes time to pay off your debt and make better financial choices. If you still are not sure the best way to go about becoming credit card debt free, you may need some additional debt advice.

The Goalry Mall can provide you a significant amount of resources and information on how to become more financially sound. At the Goalry Mall, we teach you how to create a budget that works with your needs. We understand your goals and teach you how to reduce spending and save money. In addition, we offer resources on steps you can take to pay off your credit card debt and remain debt free. After all, paying off your credit card debt is only the first step. Remaining debt free is the ultimate goal.

Conclusion

One of the most important steps you can take is to become debt free, especially free of credit card debt. It is not a good feeling when you think you are drowning in debt and cannot see a way out. If you follow the suggestions contained in the article, not only will you be able to create a strategy to pay off your credit card debt, reduce spending, and increase your savings, but you will create better financial decisions. After you read this article, go online to the Goalry Mall to get additional information on the best ways to pay off credit card debt and become debt free.