If you are struggling with high credit card account balances and other troublesome debt, you understandably may feel stressed and even hopeless. Regardless of your current circumstances, adjusting your money management efforts could help you to turn your financial situation around. Allow these ten essential tips below to guide your debt relief efforts.
1. Scale Down Your Lifestyle –
An issue with high account balances may be problematic when you cannot afford to make more substantial payments to reduce the balances quickly. With this in mind, a good starting point to improve money management efforts is to scale down your lifestyle. Consider selling your car and using public transportation. Turn off your cable TV service, and switch to a more affordable wireless service plan. These are only some of the lifestyle changes that can directly reduce your monthly expenses.
2. Stop All Unnecessary Spending –
In order to have as much money as possible available to make larger debt reduction payments, stop spending money wastefully. Until you pay off your debts, eat at home rather than at restaurants. Avoid buying new clothes or other items unless they are absolutely needed.
3. Sell Unwanted Items –
You can raise a substantial amount of money to apply toward balance reduction by selling unwanted items. This may include everything from designer shoes to electronics, furniture, lawn equipment and more. Any proceeds can be directly applied to debt reduction to give your efforts an extra boost.
4. Start An Emergency Fund –
When you are trying to pay your debts off, stashing money in a savings account may seem counterintuitive. However, with a reasonable amount of money in a rainy day fund, you may be less likely to use credit cards when emergency situations arise. A good starting point is to save the equivalent of three months of expenses, and gradually increase your savings account balance.
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5. Consider Debt Consolidation –
Consolidating accounts with high-interest rates and revolving terms makes sense in many cases. Through consolidation, you may set up more affordable monthly payments. Furthermore, the outstanding balance will be established on a firm repayment plan with a final payoff date. Just look at the fine print and make sure that it makes sense financially. A Debt Management Program is a great way to consolidate debt into one affordable monthly payment.
6. Target One Account –
The snowball method for reducing debts has been effective and useful for many people. It involves targeting the account with the lowest balance first. You will make the minimum payments on all accounts as required, and the targeted account will receive all additional funds available for efficient balance reduction. Once that account is paid in full, you’ll then take that payment amount and apply it to the next account in line. You’ll keep this process going until all debts are paid in full.
7. Set S.M.A.R.T. Goals –
It can take years to dig out of a deep hole, and you can easily feel dismayed by slow progress. The easy way to overcome this mental challenge is to set reasonable goals. Monitor your progress by tracking account balances each month. Check out our post about S.M.A.R.T. goals: https://www.advantageccs.org/blog/how-to-make-s-m-a-r-t-financial-goals
8. Use Windfalls Strategically –
Many people receive windfalls throughout the year, such as a tax refund or a work bonus. Rather than spending these large sums of extra cash, apply them directly to the account that you are currently targeting. This is a smart, easy way to pay your balances off faster.
9. Get A Second Job –
Another thoughtful idea is to get a second job and to use all income from that job to pay off credit cards and other accounts. Today’s workers enjoy incredible flexibility with side hustles, such as by being a rideshare driver in your free time. You can control when and how much you work based on your other commitments with these types of jobs.
10. Seek Professional Assistance –
Many people can successfully get through a tough financial situation by applying these money management tips. However, if you need additional assistance, contact a reputable non-profit credit counseling agency. Professional credit counseling can help you to identify strategies that may be most effective for your specific circumstances. The credit counselor can let you know what your best options are.
Managing your finances effectively can be challenging even in the best circumstances, and it becomes more challenging when you have high monthly expenses and massive credit card debt and loan balances. Apply multiple tips listed here to take a comprehensive approach to manage your money and achieving your financial goals faster. Contact Advantage CCS for free credit counseling and help with building a budget and getting out of debt. We’ve helped millions of people since 1968!