Conquering Credit Card Debt
Today I want to talk about managing your finances, specifically, conquering that pesky credit card debt.
Look, I get it. Life is hectic, and sometimes it feels like swiping that plastic is the only way to get through the month. The thing is, those little cards can be deceivingly convenient. They offer you the illusion of having more money than you actually do. But guess what? That money isn't free—it’s a loan, and if you don't pay it back in full each month, you're slapped with interest fees. Have you looked at the interest fees each card is charging?! Before you know it, you're in a downward spiral of debt, and escaping feels like trying to break free from quicksand.
Fear not, I'm here to share some wisdom on how to break free from the chains of credit card debt:
1. Face the Music: The first step to fixing any problem is admitting you have one. Take a deep breath, gather your statements, and confront your debt head-on. Ignoring it won't make it disappear, in fact, ignoring debt makes the debt increase!
For example: A card with a $5000 balance, a 25% interest rate and a minimum payment of $110 a month will take you 143 months (~12 years) to pay off - that is if you don’t add anything else to the card. In month 143, you have paid the credit card company $10,688 more than the $5000 they loaned you initially. So, what you initially bought for 5000 actually cost you $15,688! The credit card company thanks you for the free money!
2. Plan Like a Boss: Once you have gathered all your credit card statements make a list. The list can be pencil and paper or an Excel spreadsheet. Use columns to:
1. List all your credit cards
2. Next to each credit card list the % interest rate
3. Next, write out the balance on each card.
3. Attack High-Interest Debt: Not all debts are created equal. Focus on paying off your high-interest credit cards first while making minimum payments on the others. It's like slaying dragons—one at a time. The only caveat is, if you have a small amount on one of your credit cards knock it off first and celebrate your win. It can really motivate you to take on the rest of your debt!
4. Negotiate Like a Pro: Don't be afraid to call your credit card company and negotiate for lower interest rates. They might just cut you a deal if you ask nicely. Remember, you miss 100% of the shots you don't take.
5. Set Aside Credit Cards: Once you have removed a balance from a credit card set it aside. Do Not Use It! You want to get down to one credit card, with a possible backup. Do not cancel any cards as that may hurt your credit score. Just set them aside. Your credit score will improve as you lower your overall balance.
6. Seek Support: You don't have to go on this journey alone. Talk to friends or family members who have been through it, or reach out to me if you need help. There's no shame in asking for guidance.
7. Celebrate Your Wins: Every time you make a dent in your debt, celebrate it like it's your birthday. Treat yourself to a bubble bath or a dance party in your living room. You deserve it!
8. Emergency Fund!: Once you have lowered your credit card balances start building up an emergency fund so you're not tempted to whip out that credit card every time an unexpected expense pops up.
Remember, Rome wasn't built in a day, and neither is financial freedom. It's a journey—a marathon, not a sprint. But with patience, determination, and a sprinkle of self-love, you can kick credit card debt to the curb and live the life you deserve.
So, let's raise our glasses (filled with budget-friendly tap water, of course) to a future free from financial shackles. You've got this—I believe in you!
Until next time, stay Financially Fit and Fearless!