I regularly insist on credit cards, not only because I believe they are extremely useful financial products provided they have a responsible use , but I also believe that a possible slip could be the beginning of a debt cycle difficult to solve.
If you regularly have concerns about the credit card debt you hold then this article is for you. I know you probably would have thought and said to yourself that you would stop using the credit card. However, it is stronger the desire to use and it is becoming more difficult to get rid of the monthly bill that every month seems to increase and never ends.
Stay tuned, this article is for you and for all those who have not yet realized that they may find themselves in the same situation in the future.
Recognize Credit Card Debt
This step is essential because it is only after the internalization that the credit card debt is taking on considerable proportions that you can start a strategy or create conditions for it to disappear.
So how much do you pay monthly for a credit card and what is your current debt? Do you consider this debt to be high and it consumes more than 30% of your family’s monthly disposable income?
These are simple questions with simple answers that will tell you so much about your credit card situation.
Have the Desire to Get Rid of Your Credit Card Debt
Do not make omelets without eggs. Therefore, you will not be able to end your credit card debt if you do not wish to. With the desire for such liberation you will have the conditions to stipulate a strategy to end credit and set goals and objectives. Do not leave this desire alone, try to share with other elements of your household, as they will be the strength you need to continue in the most difficult times.
Know Your Financial Capability
There are those who like to call financial planning. That is, the knowledge of all the expenses and income of your household. Others exist, which generalize and call personal finance. However, I prefer to call it financial capacity, that is, how far your money will allow you to take it.
Do you know your balance point? That amount in which all your expenses are met and all the money left over is surplus and that this surplus is necessary for savings and any family wishes.
To facilitate the knowledge of your break-even point, I suggest you check your expenses with credits, water, electricity, education, gas. among others, represent a maximum of 70% of their revenues. So every month will remain 30% for your desires and savings. In practice, you have to build your family budget and control it with rigor.
Well, many are the reasons to own an emergency fund and one of these reasons is to get rid of credit card debt. In fact, if you are paying 15% -20% interest rates with your credit card the use of your emergency fund to pay the debt would be a profitable investment, would not you agree?
If you do not have an emergency fund why not create one at this difficult stage where you think about getting rid of the credit card. Obviously all the money you put there not only can use in the future to end what is lacking to pay as it avoids the temptation to use the credit card whenever an unforeseen happens there by house.
Never Pay the Minimum on the Credit Card
This will never pay your credit card. Most credit card providers do not want you to pay off credit card debt quickly as this will not earn you much money. They want you to pay for some time.
Just to get an idea, a debt of 1,000 euros with a minimum payment of 5% at an interest rate of 17% will take more than 4 years and 6 months to pay.
Stop Using the Credit Card
It makes perfect sense to finish this article with the most important tip of all, since only with the awareness that you need to stop using your credit card will you be able to pay the debt on your card. Believe in your abilities, share your desires and do not give up as you will check personal and financial well-being once you have finished your credit card debt.
Turn Your Credit Card Debt into a Personal Credit
Credit card debt is very complicated to write off. One way to get rid of these debts is to turn them into personal credit. In this mode you will be able to lower the interest rate significantly as well as start to amortize progressively the amount owed. A final alternative is to try a consolidated credit. However, these two processes may need specific support. If you have any questions please do not hesitate to contact us.