Settling a Credit Card Debt the Right Way: Our Top 5 Tips

visa credit cardFinancial problems can be a very stressful issue, but it is something that many of us must deal with at some point in lives. When it comes to settling a credit card debt, there are a variety of ways to get through the process. No matter what you wind up deciding, it’s always best to keep a few of these tips in mind as you make strides towards financial freedom.

  1. Create a Plan and Stick to It

The road to financial freedom doesn’t always have to be a complicated one, but you can make it a smoother ride if you create a solid plan of attack for yourself. Do some research, and put in the time figuring out exactly how you’re going to relieve your financial burden. Outline a step-by-step plan for success, so that you will be able to track your progress.

  1. Review Your Spending Every Month

stack of credit cardsOne of the biggest parts of settling a credit card debt involves figuring out where all your money goes each month. Track your spending, and do it very diligently. This will help you out with our next tip in a very big way, as you’ll have a better understanding as to where your monthly income goes.

  1. Budget Relentlessly

Whether you’re living in Maine or New Mexico, debt settlement requires some hard work. Regardless of where you live, the importance of budgeting should always remain the same. Budget very thoroughly and try to cut out anything that you don’t actually need to be spending money on. Identify all spending as either a need or a want. Items that classify as a want are items that you can put on a wish list for purchase at a later date. Items that are a need are the items you will purchase in the immediate future since they are needed items. Review your habits each month. Perhaps you can cut back on those weekly coffee runs, take a few less trips to the movie theater or cut out that Netflix and Spotify subscription which combined takes about $20 out of your pocket every four weeks. The goal is cut out a few expenses that are considered more of a want than a need.

  1. Start with One Card at a Time

many credit cardsIf you’re looking into settling a credit card debt and you have multiple cards that are racked up, it’s a good idea to start with settling the debt one credit card at a time and working your way down the line. We suggest starting by calling the company to which you owe the most money first, as that will be the toughest burden to overcome.

  1. Consider Calling the Pros

There are a ton of organizations out there that dedicate themselves specifically to settling a credit card debt. If you think you might not have the time or energy to go about settling your debts by yourself, consider calling in the professionals. They often have established relationships within the industry, and know how to help you reach a debt resolution that will have all parties walking away happy.

 

Image credit: Cheon Fong LiewSean MacEntee,  Mighty Travels