The following is a guest post on behalf of Money Supermarket.
Do you have a financial plan for the future? Does it include a sizable savings account and a comfortable retirement? Do you want to be able to have more financial freedom than you currently have? If this sounds like you, there could be one thing holding you back from the goal – credit card debt.
No one likes to talk about it. No one wants to admit that they have it. No one even wants to take a look and find out exactly how much they owe.
However, in order to make the transition to an independent financial future that gives you the freedom you have been searching for, it is time to check your current accounts, see how much money you have at your disposal and come up with a plan.
Whatever you want to achieve, the first step is coming up with a plan. People don’t build homes by mindlessly picking up materials and tossing them together, hoping that a home will be formed. They start out with a design with specific plans and measurements.
In the same way, you need a plan for debt. You can’t just take some extra money and toss it around to the debt, hoping that it will disappear. Take a look at what you are working with.
Check your current accounts. Come up with exactly what it will take to make the debt go away. Follow through with it.
It sounds simple, but it isn’t always easy. There are three main ways to pay off credit card debt. The option that you choose will be what works best for you, your budget and your overall amount of debt. While there are other ways to pay off the debts that you owe, these three seem to work for a majority of people.
Choose a credit card and put all of your extra money to paying it off. Don’t spread out your extra money from current accounts to several different cards. You just don’t get the same satisfaction as paying off one and moving to the other.
All of the extra cash that you have to put towards credit card debt will go to just one card. Once this one is complete, you will feel like it really is possible to make a change in your financial situation. From there, move on to another one until they are all at a zero balance.
You can also choose to put money on each of the cards each month. If you just want to see the overall balances decrease, this is a good option.
You can choose a certain dollar amount that will go with each one or you can choose to spread out by percentages of the money you have to add to your payments. Check your current accounts to see what you can afford to do.
In either case you are able to make a difference. While it may seem like a slower option, you will begin to see everything dropping all at one time.
Another option includes transferring most or all of your debt to a credit card that offers a zero percent interest rate for balance transfers. This gives you some time to make a real dent in the amount of credit card debt that you have.
It may require that you open up a new card, but it also provides you with an opportunity to pay things off earlier. The new card could open up new possibilities for paying off your debt.
Look at the balance that you are going to owe. Divide it by the number of months you will have zero percent interest.
Can you make that payment each month? If not, how close to it can you get? This is yet another opportunity to make a huge change and begin to set yourself on the path to more financial freedom.