There are millions of Americans that are carrying thousands of dollars of debt on their credit cards. The interest charged on these debts earn the companies issuing the cards billions of dollars – dollars that could be better spent supporting your family or saved for your future needs. If you want to begin building wealth, you must first get rid of the debt that is draining away your income. Taking the following steps will help you rid yourself of your debt and give you strategies to prevent the accumulation of debt in the future.
Stop Using The Credit Cards
When trying to get rid of credit card debt, it is important to stop using the credit cards until your debt is under control. While this may seem like common sense, many people make the mistake of putting every dollar that they can spare towards their credit card debt, leaving them with nothing in reserve when an unexpected expense arises. That forces them to use the credit card to handle the situation, which ultimately prolongs the amount of time they remain in debt. Putting 20 percent towards your savings account and 80 percent towards your debt will give you a cushion of savings to fall back on in the event of the unexpected occurring.
Reduce Your Spending
While you are trying to pay off your debt, find ways to reduce your spending so that you can contribute as much as possible towards reaching your goal. Examine your budget for any areas where spending can be reduced without dramatically changing your lifestyle. Consider taking your lunch to work instead of purchasing fast food or refraining from going to the movies until your debts have been repaid. After a couple of weeks, your changes will become regular habits that you can use to save more money for years.
Always Pay More Than The Minimum
It will take you forever to get rid of your credit card debt if you only pay the minimum amount required each month. Most of the money paid with a minimum payment goes towards paying the interest for the month, with very little going towards the principal, so your principal remains roughly the same each month. Every dollar that you can put towards paying down the principal reduces the length of time you remain in debt and lessens the amount of interest you will ultimately pay to the credit card issuer.