We’ve got some strategies for getting out of – or reducing – your credit card debt:
1. Budget to pay a set amount every month.
As your debt reduces, the minimum amount you are required to repay reduces. This just drags the agony on for years – and is a psychological temptation to spend on the card, as you think, “Hmm, I’m only paying off R500, I can afford a little more spend on the card”.
Draw a line in the sand now. Take your most recent repayment and set that as the amount you will pay, without fail, every month until the debt has all gone. You’ll be amazed at how fast it shrinks!
2. Raise your repayment
If you have any slack in your monthly budget (and fair enough, most of us don’t), raise your monthly repayment just a little for an even quicker route to being debt-free.
(Here’s one suggestion: give something up to create that slack. Smoking would be a good choice, if you smoke. Otherwise make a pact with your partner that you will have candlelit dinners at home rather than go out; or make no voice calls on the cell; or buy-down on your TV viewing until the debt is paid.)
3. Hide your card/s
Don’t take the card out with you; put it in a drawer or the safe at home and leave it there.
4. Prioritise repayment
If you have more than one card, the total debt can look intimidating. Instead of trying to deal with it all at once, start by focusing on the card with the lowest debt.
Bump up the repayments on that one, and don’t use it at all; you’ll feel great when it’s paid off, and will have more vooma to face the next card.
5. Use your savings
If you have any savings accounts, you’d be better off using the money mouldering away in there earning nada in interest to pay off your credit card, which is costing you in interest. But don’t touch savings you’ll need to live on – like retirement annuities.
You can also use any other extra cash that comes your way: bonuses or gifts, for example.
And look around your home to see if you have anything you could easily sell on a site like gumtree: the bicycle or treadmill you never use could boost your financial health!
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