A Financial Expert Can Help You Get Rid Of Your Credit Card Debt
The socio-economic status of a person can have an impact on their ability to live well. https://dedebt.com/ is a website that provides financial advice and information to help people build financial literacy and create wealth.
Since over 5,000 years, debt has been a part of our society. Farmers have been indebted throughout human history to cover their daily expenses and to invest in their harvest. This was their only way of survival. To repay this debt, they needed a large harvest that was dependent on many factors other than their control like weather, rain and pests.
Although life has changed significantly over the past 5,000 years, people with credit card debt are still quite common. It’s also a health issue as the stress of owing money at high rates can lead to a health problem and financial health issues. This is key to your well-being.
If you are having financial difficulties, creating a plan to eliminate credit card debt can be a great way to help you get out of it. Here are the details of how to create the plan, and what you should consider in order to successfully implement it.
The 4-Step Guide to Making a Plan to Get Rid of Credit Card Debt
1. Accept responsibility for your position
Because I have been in credit card debt multiple time, the last time I got out was when I took responsibility for my situation. It was. Only then did I realize that debt was a costly lesson I had to learn. Instead of feeling guilty and ashamed, I started to think about Why I was relapsing in credit card debt and focusing on what I could control. You can see the situation differently and have a better approach to it by taking responsibility. This helped me to take control of my debts and make decisions.
Financial abuse can include having your partner control all aspects of your finances, predatory lending practices (like when a potential lender lies to you in order to get you money), and systemic inequalities like the racism that blacks are ingrained into our banking system. However, taking responsibility will not make you a better person. You can decide how you feel and how you react to it. In some cases, these are the only things that you have control over.
2. Know your debts: How much and to whom?
Once you are empowered to accept responsibility for your credit card debt, it will be easier to review it. You can access your credit report to find out how much and who you owe.
You are entitled to one free credit report each calendar year, as per law. Order it online from annualcreditreport.com, the Federal Trade Commission (FTC) ‘s only authorized website for free credit reports, or call 1-877-322-8228.
3. Make a list of facts about credit card debt
A list of your debts will give you a good overview. This type of list is best done using a spreadsheet, but pen and paper are also options. Here are the items that should be included on your list.
- Name of the lender (to whom the money is owed)
- The principal amount that you owe.
- The percentage of interest you pay (APR)
- Minimum monthly payment
This list will help you to determine the best way for you to manage credit card debt.
4. To get rid of your credit card debt, you should create a payment plan
Your plan for getting rid of credit card debt is important for many reasons. A plan will help you reach your debt-free day, which is the day when you are debt-free.
After you have taken a step back, and reviewed the overall plan including the date of debt-free, you can decide whether you are ready to tackle it. A simple debt management tool can help you create your plan if you feel you could benefit from more structure. Unbury.me is my favorite tool to create a debt plan. It’s free and online, so it’s easy to use.
Unbury.me allows you to enter your debt details. The database will calculate how long it will take to pay off your debt, based on the amount of your current payments. The slider at the bottom shows you how changing your payment amount could affect your debt-free day and how it can impact the amount of interest that you pay. . Paying down debt earlier means lower long-term interest payments, but this is only possible with a higher monthly repayment.
You can also choose whether you want to pay off high interest debt first or lowest balance debt. Although it is not the best strategy for minimizing interest payments in the long-term, paying the lowest balance first can have a positive psychological effect. If you have a balance, it means you are proving to yourself that your ability to pay off debt. It’s like watching the ball go over the basket. It’s inspiring and motivating.
Here are four key points to consider when you plan to get rid of credit card debt
1. Is your debt manageable or unmanageable?
It’s best to follow your plan if your payment plan is feasible and you don’t end up in debt within a reasonable time frame (a few years). You may have to consider other options such as debt consolidation or nonprofit credit counseling.
2. Consolidating credit card debt: When is it a good idea?
Consolidation refers to consolidating multiple credit cards into one debt with one payment. Consolidating your debt is not an easy decision. It is a smart decision to consolidate if you want to get out of debt as soon as possible.
Consolidating debt can increase your risk of falling into more debt. Your credit cards will be paid off and you can begin billing again.
3. What consolidation options are available?
If you have the opportunity to borrow from family members who are willing to consolidate your debts in the form a personal loan, you should seriously consider this option. Borrowing money from friends or family is often the cheapest option of all loan options. There are no upfront fees and a lower interest rate. You also have flexibility in your payments. No credit score or application required. This can have a negative impact on your relationship.
A personal loan can also be offered by a bank, credit union or any other lender that specializes in personal loans and refinance of credit card debt. You should do your research to learn about your options. Every lender will have different terms, fees, and rates. Your options are greater if you have a good credit score. Peer-to-peer loans are available for those who have difficulty with traditional lenders.
4. What about a balance transfer
Balance transfers are when you transfer your balance from one credit company to the other. This is usually done because of a promotional rate, such as 0% APR for 12 month. This usually comes with a 3% fee, so make sure you factor that in.
Balance transfers are not something I recommend. It means that you have more credit cards, and more opportunities to go into debt. However, you could use the 12 months to repay your credit card debt and improve your credit score to be eligible for a personal loan.