In 2012, the average American household carried around $15,590 in credit card debt. Adding that to monthly bills such as car payments, rent, insurance, groceries and other living expenses can be quite the burden and enough to make your head spin. One way to achieve more peace of mind is by paying off your credit card debt. Although it may initially feel difficult, we will discuss some creative ways to help you get out of a financial hole.
In This Post:
Use your tax refund to lower your balance
In the past, you might have looked forward to your tax refund as a way to go on a shopping spree. Now that you're in debt, it may prove hard to spend money that you don't really have to spend. Instead, use your tax refund to make a large annual payment. In addition, this method will help you pay off your debt much faster.
Think of a balance transfer
Naturally, you might not even want another credit card. Although, if you can get one with a 0 percent APR, you can then avoid interest while paying off your debt. The only caveat is you should not miss the monthly payments, and you should be completely aware the card's terms.
Find a part-time job
If your debt is financially burdensome, you may feel better about it if you have an additional source of income. There are many options for part-time jobs such as tutoring, golf lessons, programming from home or even working in retail. You'll be too busy to spend more money, and you'll have extra cash to help you pay off your credit card debt.
Pay cash for most things
It can be easy to over spend when you use a card for every purchase. It can be hard to keep track of your spending. Instead, take out some cash and make the commitment to only spend the amount of cash you have in your wallet. This can prove quite useful when grocery shopping, eating out or clothing shopping. Once you run out of cash, then you can no longer spend.
Carpool to work
This option can significantly cut down on car maintenance and gas costs. Plus, it can be quite entertaining when riding to work with friends. It might even help you save on the cost of car insurance costs if you drive only a certain number of miles per year.
Cut your cable
With so many digital options such as Netflix and Hulu, there really isn't any reason to pay for a cable service. Each provider has more than enough television shows and movies to keep an entire family entertained. Plus, it is a lot less expensive with a monthly rate of under $15 per month.
Make money through your hobbies
Why not start your own business doing something you love? Not only will it give you a creative outlet, but you'll have some pride in selling something you created. It can be anything from making jewelry to mixing unique concoctions of soaps and body creams. There is nothing better than making money from hobbies you enjoy.
Pay above the minimum
Paying only the minimum just makes the pain of credit card debt last even longer than it needs to last. Not to mention, banks want you to pay the minimum because it means they make more on interest. The best strategy is to take the road less traveled and pay as much as you can each month. To illustrate, if your minimum payment is $60, see if you can afford to double it and pay $120. Take a look at what luxuries you can afford to give up, and focus on the big picture of having financial freedom.
Renegotiate your terms
If you just don't have any discretionary income to reduce your credit card bills, then you may just have to let your creditors know your situation. Let them know that if you can't renegotiate your terms, then you may have no other choice but to declare bankruptcy. You can start by asking for a lower repayment schedule or a lower interest rate. They really just want to continue receiving payments. Creditors don't want to risk a total loss if you declare bankruptcy. You don't know their response until you try.
Despite your best efforts, credit card debt is akin to a dark cloud hovering over you wherever you go. Unless it's paid off, it won't go away. Yet, with a plan and commitment, it can be done.