Making a long-term plan for paying off your credit card debt is the first step to being debt free. The second step to getting out of debt is simple:
”There are plenty of ways to get ahead. The first is so basic I’m almost embarrassed to say it: spend less than you earn.” ~ Paul Clitheroe.
There’s no big secret to achieving your financial goals, just like there’s no big secret to achieving your weight loss goals. Getting out of credit card debt isn’t complicated – but it does require time, patience, and self-discipline. Dave Ramsey’s The Total Money Makeover: A Proven Plan for Financial Fitness is an excellent book for financial goal planning – including paying off your debt.
And here are six financial tips for getting out of credit card debt…
6 Ways to Get Out of Credit Card Debt
1. Take stock of your finances – the “big picture.” Review your net worth, credit score and cash flow to get a solid picture of your financial health. A credit report is an excellent place to start, as it’ll help you determine how your debt is affecting your life and how much work you have ahead of you. If you spend more money than you make, then you need to figure out how to cut back.
2. Organize your finances – and keep them organized. How much credit card debt do you have, how much interest are you paying, and why are you in debt? The second step to paying off credit card debt is creating better money management habits. This isn’t just about creating a household budget – though that’s part of it. Getting out of debt is about knowing all the details of your debt.
3. Set short and long-term financial goals. Before you can achieve your financial goals, you need to figure out where you want to be financially in one year, five years, and ten years. Do you want to pay off your mortgage? Retire at age 60? Put all your kids through college or university? Buy land in Costa Rica? These are achievable financial goals – even if you’re still wondering how to pay off credit card debt.
4. Make sure your financial goals and spending habits are aligned. If your financial goal is to pay off your mortgage but you eat out in restaurants four times a week, then your goals and spending habits aren’t aligned. If your financial goal is to retire at age 60 but you have a low-paying job and expensive habits, then your goals and lifestyle isn’t aligned. Part of paying off your credit card debt is to make sure your spending habits and investment strategies are in tune with your financial goals.
5. Create a financial support network. This is the premise behind the popular The Smart Cookies’ Guide to Making More Dough and Getting Out of Debt — it’s a group of four women who wanted to pay off their credit card debt and achieve their money goals. So they formed a support network and accountability group, and meet regularly to make sure they stay on track financially. One of the best ways to achieve goals — financial or otherwise — is to find likeminded people and keep each other accountable.
6. Review your progress regularly. One of the best ways to get out of debt and save money fast is to review your finances every month or two. Reward yourself for every financial milestone you reach, even if it’s “just” saving $100 a month. Your reward doesn’t have to involve spending a lot of money — it just needs to be something you enjoy.
Paying off your credit card debt may happen sooner than you think! I paid off my student loan debt in three years. It felt like forever, but I just kept slogging away…and now can barely remember the sacrifices I made to pay it off as quickly as I did.
Do you need more tips for paying off your debt? Read Money and the Law of Attraction – 4 Ways to Attract Wealth.
If you have any thoughts on how to pay off credit card debt or these ways to get out of debt, please comment below…