Credit card debt can be overwhelming to tackle, especially if you’ve let it pile up. But spring cleaning works just as well for your finances as it does for your closet! Take a look at these steps to see an immediate improvement in your credit spending habits.
Improve Your Interest Rates
If you have a lot of debt on a card with sky-high interest rates, you should try to lower the rate as much as you can. Many consumers think interest rates and APRs are set in stone, but they can often be up for negotiation. Try calling your credit card company and politely ask for a lower rate— just a percentage or two could make a big difference. If you don’t get anywhere with the sales representative on the line, ask to speak to their manager. Sometimes taking your question to a higher level can yield better results.
If this doesn’t work, consider opening a balance transfer card. This type of credit card allows you to consolidate your debt into one place. They typically offer very low introductory rates to help you chip away at your debt more quickly. But be careful— after the into period is over, the interest rates can skyrocket and hurt you more than help you. While balance transfer cards can be incredibly helpful, make sure you understand the terms before consolidating debt.
Create a Strict Budget
There’s no way you can clean up your credit card spending without creating a strict budget. Look back through several months of your credit card bills to get a clear picture on how you’ve been spending your money. Is there anything that jumps out to you? Start by listing at all your necessary expenses, such as rent, utility payments, gas, groceries, student loans, etc. Then take a whack at reducing your spending in the “fun” areas, like eating at restaurants and going to the movies. You don’t have to eliminate these enjoyable activities— just cut back on them so you can allocate some extra money to paying off your debt.
Pay Off Debt in Descending Order
Now comes the time for actually putting your money where your mouth is. The quickest and most efficient way to pay off debt is to tackle it in descending order based on your interest rate. If you have unpaid amounts on three cards, focus on paying off the card with the highest interest. This is the card that will bury you in more debt if you continue to ignore it. Keep paying the minimum amount on all you other cards, but put all your extra money toward eliminating the big one. Once that’s paid off, move onto the card with next highest interest rate, and so forth. This descending pyramid of debt repayment will save you money in the long run!
Free Up Extra Money
Even if you stick to a strict budget, it’s never a bad idea to put as much money toward debt repayment as possible. What’s an excessive expense in your life that you could do without? How about that fancy cable package, artisan coffee habit, or obsession with expensive clothes? Cut something out of for the time being so you can clean up your credit card debt. And who knows, you might find that you don’t actually need to make those purchases even after the debt is paid!
If you’re in desperate need of cash, try starting a side hustle. It’s incredibly easy to start driving for rideshare services, walking dogs, babysitting, or selling your artwork online. Even in you work or study full-time, you can always carve out a few hours on the weekend to dedicate to making extra money for your debt payments.
Set Goals and Track Progress
This whole process can be tiring and discouraging, so it’s critical that you keep track of how far you’ve come. After analyzing your spending habits and setting up a budget, create some attainable goals for yourself. Aim to have a certain amount paid off by a specific date so you have something concrete to work toward. And don’t starve yourself of rewards! If you meet your goal, treat yourself to a yummy meal or a cute shirt you’ve had your eye on. While you don’t want to go crazy with rewarding yourself, positive reinforcement will keep you on track to take your credit card debt down to $0.
Not only will these tricks help you clean up your spending, but they’ll also set you up for financial success in the future. For good habits now and reap the rewards for the rest of your life!