Based on studies, at least 61% of Americans carry a revolving credit card debt. Credit card statements for the month of January are usually the bearers of bad news to augur the arrival of the New Year. Thus, finally getting rid of all debts has been a favorite New Year’s resolution for many Americans.
According to professional credit counselors, it is during times of great economic difficulties when a lot more people come for help in getting out of the dire financial rut they have gotten themselves into. And you guessed it right – this usually happens after the holidays or in the month of January.
Right before and during the holiday season, an average consumer spends around $690 on holiday-related shopping. That amount, coupled with the previously accumulated debt and compounded even further by a struggling economy, forces people to find vigorous actions to curb their debt problem the soonest possible time.
Following are some steps recommended by credit counselors to help address the mounting debt problem:
• Consolidate balances through balance transfer schemes.
Contact your credit card providers and find out how you can transfer the balances of your other cards to the one that charges the lowest interest rate. If this is not possible, pay off as much principal as you can afford on the higher interest-bearing cards, starting with the one with the highest rate. Then pay at least the minimum balance on your low-interest cards. Once you have completely erased the balance of one high-interest card, move on to the next.
• Assess the total amount of your debts.
Once you have summed up your debts, find an online debt payment calculator and experiment on the various payment amount combinations to arrive at a monthly payment that will be manageable and realistic for you. Stick to the payment plan until all your debts are paid off.
• Avoid charging.
Additional credit purchases and loans will only make your debt situation worse than it already is. It will only negate whatever steps you have taken to reduce your total outstanding balance.
• Find ways to augment your income.
If your current income will not be enough to cover your basic expenses after allocating a set amount to pay off your debts, your best option is to cut on your spending and/or increase your cash inflow so you will have as much available fund as you need for your monthly debt repayment budget. You can work overtime or find part-time jobs to earn more money.
• Keep focused on your goals.
Your goal to get rid of debt as quickly as possible will not work if you do not focus on the task at hand. Put the settlement of your debts at the top of your priority list for the duration of the set timeframe. There will be times when you will be tempted to use your card to pay for a fancy dinner or buy the latest gizmo. However, you should be able to fight the temptations. Staying focused and sticking to your spending plan is the only way to reach your goals.