If you have credit card debt, you likely feel this imaginary ball and chain dragging behind you as you walk around through life. You already spent the money some time ago and now there is a balance on your statement.
Month after month, the balance comes and haunts you. You want to eliminate your debt and move past the stress, but how?
It’s not all doom and gloom! You can reduce debt, you just need to change the way you think about it, make a few simple adjustments, and stick with them. Adopting a few methods from the following tips is a good start.
You Are Not Alone, Most Americans Have Credit Card Debt
The New York Federal Reserve reported that after the 4th quarter of 2020, consumer debt had reached $14.56 trillion. Home, auto, student loans, and credit cards have grown consistently.
Most Americans have credit card debt. In the 4th quarter of 2020, credit card debt was $820 billion.
That was a decrease in spending, likely because of the COVID-19 pandemic. A year earlier, credit card debt was up to $930 billion.
Some of these numbers come because of the Bankruptcy Protection Act of 2005. This made it more difficult to file bankruptcy, which has pushed people toward credit cards to pay bills. There were simply few options left for people.
As a result, in July 2008, credit card debt had risen to a whopping $1.028 trillion. During the first three months of the year 2009, because of the recession, credit card usage had fallen 10%.
Then the Dodd-Frank Wall Street Reform Act passed. This meant more regulations over credit card companies. Banks and lenders then cut down on consumer lending.
Credit card debt lowered to $839.6 billion by April 2011. This stayed flat. However, on average, American households own approximately $8,400.
Okay, now that we discussed credit card debt for Americans, let’s get back to you and your dilemma.
Let’s Start With the Positives
On the bright side, you’ve learned something. You no longer want to carry around this burden, but it won’t happen overnight. You’ll have to take baby steps.
A few pieces of simple advice can help change your mindset and get you on the right track. The debt-free utopia.
Here are ten tips to reduce debt. Ready for it? Let’s go!
1. No More Credit Card Spending
First, if you want to lessen your debt, stop using your credit card. Period. Albert Einstein is the one who said, “The definition of insanity is doing the same thing over and over and expecting different results.”
If you want to stop the never-ending cycle, don’t spend money using your credit cards. You’ve seriously gotta stop that.
You can’t pay off your debt if you continue to raise your debt. It’s like filling a nice clean pool with a giant leak in it.
Cut your credit cards in two! Or dig a hole outside and bury them.
Whatever you want to do with them is your choice. Just don’t use them to spend anymore.
2. Find the Total You Owe
If you want to take a giant leap to reduce debt, find out what the total is that you owe. Break it down by how much you owe and to who. Next, add the interest rate for each.
It is important not to skip this step. This is how you lay the groundwork for a good plan. First, you need to learn how to play the game, and then you can learn how to win.
We are planning your method of attack!
If it is time-consuming, so what? Take the time to do it. This is how you are going to improve your life and break the ball and chain with bright days ahead.
3. A Little Planning and Some Patience
A good financial plan can help you achieve your goals. You want to reduce debt, but you should also plan to save and invest what you have. This is how you create a better life for yourself.
You learn to grow your money versus spending your money. We call this wealth building.
Planning can help you get more aggressive about making a difference, setting you on the right path to becoming debt-free. Give yourself a good amount of time and be realistic.
You must have patience but you also need to create a plan that is achievable so that you stay positive and avoid frustration. If you create a plan that is difficult to achieve, you will find yourself disappointed and potentially giving up.
You want to plan a road that is bound for success with your determination. Every time you make a little progress, you’ll feel a little better.
4. Less Is More
Next, you need fewer credit cards. Not more, less.
If you have five to ten credit cards that are coaxing you to spend them, you might just spend them. And you really don’t need that many credit cards.
While it varies by your situation, experts say you should have one to three credit cards. The reason is that you can have two cards on you at all times and one safely stowed away.
Credit cards are good to have on hand, but only when used properly. The important thing is that you don’t spend outside your monthly allowance.
5. Building an Emergency Fund
You should use a rainy day fund for when emergencies occur and are over your budget limit. That is how to avoid credit card spending.
Relying on cash is better than relying on your credit card. As you work to reduce debt, you want a buffer for yourself.
Experts say you should start with creating a $1,000 emergency fund. Don’t stop at $1,000, keep building up to six months of your paycheck if you can. Six months is good planning for if you lose a job, for instance.
Try to plan putting away about $100 per paycheck of thumb. It will build up quickly and stay there in case you hit a rough patch.
6. Live Under Your Means
While reducing your debt, you don’t want to go back into debt. Otherwise, you’ll feel like a mouse running on a wheel, going nowhere except one place.
Part of this means that you have to get used to living beneath your means. The last thing you want to do is have to start all over again, right?
Learn to love living as a frugal shopper. Get excited about finding deals and lower price alternative options. Help yourself not impulse buy, but buy what you need.
Make this your new mantra. And if you can do this, you will successfully reduce debt.
7. Debt Consolidation
Debt consolidation is another option for you. You can reduce credit card debt by consolidating to one loan with a lower interest rate. This is a way to save on credit card interest.
Before applying this method, read over the rules and fees, especially the APR. Make sure that you have a clear understanding and that you are in fact saving money on credit card interest as the APR may be too high.
Sometimes, when you read all the terms, conditions, and fees, you are not saving. That becomes a waste of time and won’t help you feel any better in your soul. If this happens, perhaps low rate personal loans can be an alternative option for you.
You still need to change your spending habits and mindset so that this doesn’t happen to you again.
8. Get an Accountability Partner
Accountability partners can help you reduce debt. They are there with you, so you stick to the plan and achieve your financial goals. They will help see that you are sticking to your short, mid, and long-term goals.
They are there to motivate you as you take this journey and help you prioritize. It’s nice knowing that someone has your back and that you are not alone in this.
9. Get Your Mind in the Right Place
The right mindset will help you succeed. It is the most valuable thing you have. Putting your mind where it needs to be so that you can be debt-free.
You want to remove the ball and chain. It is eating away at you, and you are ready to move on. Stay positive!
A positive mindset will help you reduce debt. This is a long road, and it won’t be easy, but that is why you need to prepare yourself mentally. Stay focused and positive.
Daily affirmations will help. Tell yourself you can do it. Remind yourself of what happens at the end.
A positive mindset will change your life. It will change your credit card debt too!
10. Love Yourself
Remember that, to the credit card lenders, you are a customer. You are business to them, which is the point of the interest rate. If you are racking up debt and paying a lot of credit card interest, you are good business.
This doesn’t make the credit card companies bad, they are just companies doing business with you. They don’t have an emotional connection to you.
You want what is best for you. They won’t care for you how you do. So you want to keep in mind the love you have for yourself.
A Better Life Is Waiting for You
You want a better life for yourself that is debt-free. You can do it totally, and owe it to yourself. No more credit card debt.
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Check-in from time to time and learn some really great tidbits, like this one about getting rid of credit card debt. Enjoy the day!