The average Memphis household has over $5,300 in credit card debt, which would take an incredible 13 years to pay off if you only make the minimum payments.
As a Memphis bankruptcy lawyer I’ve seen how much credit card debt can affect a person’s happiness and quality of life. It can feel like a hole you’ll never climb out of.
We’re not meant to live that way. Here are 5 tips for getting out of credit card debt so you can have financial freedom and save more of your paycheck every month.
1. Gather Your Information
The first step is to write down all of your debt and be honest about everything you owe. Are there any debts that might be easy to pay off? Any that have much higher interest rates or other penalties? That’s helpful for knowing how to prioritize.
You should also write down all of your expenses. There may be obvious ways to cut back and use the savings to pay off debt.
2. Make Your Minimum Payments
If at all possible, make your minimum payments on time to keep your score up. Having a good credit score will offer you more options for paying off your debt. For example: you may be able to consolidate everything onto one card that’s interest-free for 18 months, or you may also be able to call your credit card company and negotiate a lower interest rate.
These options aren’t practical for everyone, because they require a good credit score. But if you do have a decent score, you can use it to your advantage in paying off your debt.
3. Focus on One Card at a Time
Interest can make you feel like you’re never making progress, so by focusing on one card, you give yourself a real, achievable goal. Ideally you would make minimum payments on all your cards, and then pay anything extra toward one specific card. To save the most money, concentrate on the card with the highest interest rate.
4. Make Payments More Often
Credit card companies charge interest on a daily basis, so if you can make more payments over the course of the month, you should. Make sure to pay the minimum, and then make another payment every week or two if possible. This keeps your balance down, which helps you maintain a lower interest. This strategy can drastically lower the time it takes (and the money it costs) to pay down your debt.
5. Get Help With Credit Card Debt
Sometimes you just can’t pay the debt, and it could hurt you in ways you never expected. Creditors might harass you, and they can even take you to court to seize your property or take money out of your wages.
Some people try credit counseling, which helps you set up a payment plan. But keep in mind, credit counseling isn’t governed by law, so your creditors aren’t held to it. You can still face serious consequences if you can’t pay.
Bankruptcy is governed by law. It stops creditor harassment, stops repossession, and stops wage garnishment. For people with credit card debt, filing Chapter 7 offers a totally fresh start and usually allows you to get out of that debt entirely without having to pay it all back.
If you have overwhelming credit card debt, don’t wait. It’s holding you back, and it doesn’t have to.