Credit cards are great mirages that make you think you have money to spend when the situation is actually very different in real life. Even if you use your credit card only in situations where you don’t have any cash but you need a certain sum of money to solve a situation or implement income ideas, there is a high risk, One can still end up abusing their credit card and creating a large pile of unintended debt.
Credit card debt, car payments, and student loans are some examples of debts that are costing you money—and are probably causing you unnecessary stress too. The good news is that once you make paying off your debt a priority, it’s often easier to do than you think.
A lot of persons have cases relating to credit card debt and it may be a little difficult to get out of the debt because of the high-interest rate and the temptation to spend more than they earn. This is one situation where you don’t want to find yourself in for a very long time because it drains a person’s finances and limits the savings and investment choices available to the debtor.
If you continued borrowing money from your credit card to make various purchases, you probably end up in the situation of not being able to pay your debt. Also, you realize that you don’t have any money left either, so what can you do to get out of this unpleasant situation? It is something challenging for everybody, but you can get out of it if you pay attention and do not handle the case with levity.
If you want to be free from credit card debt so you can keep some more money in your pocket and achieve your financial goals, If you’re ready to tackle your debts, below are 7 different steps to pay off your debt for good.
How To Pay Off Credit Card Debt When You Have No Money
1. Start By Creating A Budget
You should have a budget for yourself. Plan your finances accurately. Not having a budget when you’re dealing with credit card debt is not a good idea. Don’t tell yourself that you know what your expenses are in your head because by this way, it is very easy to make a bad decision. There is a saying that the faintest pen is better than the smartest brain.
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Putting your numbers down on paper and looking over them every day will make you more aware of the situation. Also, a budget will help you see how much you can spend on the debt every month so that you will be able to cover it more efficiently.
2. Emergency savings fund
Let’s face it, sooner or later, emergencies are going to happen. Emergencies are usually unexpected, so everyone should always be prepared for them.
Before paying off your debts, creating an emergency savings fund of at least $1,000 will help you pay unforeseen expenses and give you peace of mind.
Some examples of unforeseen expenses are:
- Car repair
- Medical bills
- Boiler repair
- Unexpected trips
- Speeding fine
It’s easy to do. Keep your savings fund separate, and don’t touch that money until an emergency pops up. Use the emergency fund to pay for it, and during the following months, make sure to save the $1,000 again.
By doing this, you will avoid getting into more debt. Plus, it’s a healthy habit.
3. Put Together A Plan For Paying Your Credit Card Debt
You can’t efficiently start paying your debt if you don’t have a plan first. You need to have a close and accurate overview on the status of each of your accounts. Thus, make a comprehensive and detailed list where you will include the debt, balance, and interest rate of every one of your accounts.
Next, you’ll have to create a priority, deciding which of the accounts you need to pay first. Then, pay as much money as you can afford every month on the account you consider as number one priority and pay less or minimum for the rest of your accounts. This way, you will deal with one account at a time, instead of panicking about all of them.
4. Don’t increase your debt
As obvious as it sounds, many people don’t pay much attention to this first step. Like I said earlier, if you don’t know why you are in debt, then it will be hard to stop increasing your debt. You need to keep your balance positive.
Balance = Income – Expenses
Income is the money you earn every month, and expenses are what you spend. If you spend more than you earn, then your balance is negative, and you are adding to your debt.
Some ideas to prevent increasing your debt:
- Decrease your credit card limit (or even better, cancel the card!)
- Think twice before you buy something. Change your mentality from “need it” to “nice to have it”
- Book cheaper holidays
- Create rather than consume
Everything that involves spending less will help you with this step.
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5. Find A Way To Cut Your Monthly Expenses
Do you know where your money flies every month? Do you even have an idea of the things you spend money on? At this point, when you buy things, Well, you can always check your monthly bank statements and see how and on what you spend your money.
While looking at each purchase, do ask yourself if it was really necessary to make it. Most certainly you will find some expenses that can be cut from the list. That way, you will be able to generate more money that will cover for your credit card debt.
There are loads of ways to reduce your expenses. Here’s a list of things you can do to cut down your expenses:
- Cook your own meals at home, from scratch. I do my grocery shopping every week, and it’s very easy to stick with my budget because I know I can’t spend more than a certain amount. Then, every evening after work, my wife and I cook dinner as well as lunch for the following day. This helps us a lot in cutting down our expenses.
- Swagbucks helps me earn gift cards that I can use at Amazon, and it’s very easy. Swagbucks gives you points for using its search engine (it’s just like Google), then you can redeem those points for gift cards. I’ve already redeemed 3 Amazon gift cards for $50, and it feels great. Plus, you’ll receive a free $1 bonus just for signing up today!
- Ebates works similarly. Instead of points, you’ll earn money when you shop at more than 4,400 retailers. You just need to sign up and see all the available offers and discounts. Also, you’ll get $10 cash back if you spend $25 online.
- Keep an eye on coupon codes. Every now and then I search for coupons.
Keep in mind that getting rid of debt is a goal, so you need to be committed to it and understand that you are not cutting costs for anything.
6. Look For Ways That Will Increase Your Monthly Income
A great way to pay for your credit card debt faster is to make more money each month. How to do this? You can always find a second job, work as a freelancer, sell the things that you no longer need but are in a good condition online, earn money from one of your hobbies, and even by starting a small business. As long as you are creative, you will manage to find a skill or talent that you have for earning more money than you currently do.
- Find a part-time job. Babysitting, working in retail, or even doing freelance work are some examples of part-time jobs you can do to make some extra cash.
- Start a blog. Blogging is my number one hobby, and every month I’m making $1,000+ as a side hustle. If you don’t believe it, you can check out online income reports from many successful bloggers online to see where the money is coming from. You can create your own blog here with my step-by-step tutorial (it takes less than 10 minutes). You can start your blog for as little as $3.95 a month if you sign up through my tutorial (plus get a free domain).
- Answer surveys. Survey companies I recommend are Swagbucks, Vindale Research, American Consumer Opinion, Survey Downline, Earning Station, Harris Poll Online, Topcashback, and Mr. Rebates. All of them are free to join! You get paid to answer surveys and use some test products. The best thing to do is sign up for all of them, and start answering surveys to make as much money as possible.
You can also take free courses online to acquire certain sets of skills that you can use to make some money. There are several free online classes you can take that will equip you to handle things for people. That way, you can make some money both to cover for some of your genuine needs and to pay off your credit card debt.
7. Attempt Getting A Lower Interest Rate
I want to let you onto a secret that you may not have known. Interest rates are what makes paying your credit card debt so challenging. If you have a good credit score and a positive history of payments, you may have some chances for success when it comes to asking your credit card issues for lower interest rates.
But, in case the issuer won’t budge at all, you should consider moving your balance to a credit card issuer that can offer a lower interest rate.
You can also attempt getting a balance transfer. With a balance transfer, you can put your current credit card balance on a new credit card that provides a 0% interest rate for a period of time. Ensure that after getting a transfer, you do not spend the extra money on things other than paying off your debt.
I have shared with you some of the steps you can take in order to live a credit card debt-free life. Ensure that you follow the steps and see your debt vanish and your savings increase.