Paying down debt incurred from credit cards can seem like a daunting challenge. Even the most financially responsible people sometimes find themselves carrying around credit card debt.
So, if you find yourself in this situation, you can take comfort in the fact that you’re not alone. In fact, having a balance on your credit cards is more common than you may think.
Recent research conducted for Bankrate.com reveals that more than 1 in 4 Americans owe more in credit card debt than they have in savings.*
Paying down debt, however, can be easier than you may imagine. Here are 5 practical steps to help you pay down your higher-interest debt:
- Add it up. Multiple credit card balances. Department store cards. Even medical expenses or other debts. Knowing the “big number” of exactly how much you owe might feel a bit scary at first. But you can’t tackle what you don’t understand. So getting a firm grasp on the total is a top priority.
- Give yourself a goal and a deadline. Be specific and write it down. Saying your goal is to “pay off your higher-interest credit cards” is nice but not very motivating. On the other hand, stating that you’re going to “pay off $12,000 in debt before September 2016” gives you a concrete goal to begin taking steps toward.
- Combine and conquer. It’s easy to feel discouraged if you’re juggling payments on multiple balances. But you can get a clearer picture of your path forward by combining all your debts into one place. As an added advantage, rolling balances from multiple higher-interest credit cards into one grand total in a personal loan could also help you save money with lower interest rates.
- Tell a friend. Don’t hide your financial goals in the dark. When you tell a friend you’re working toward paying down debt, you’re likely to get a nice injection of moral support. Plus, the simple act of telling a respected friend that you’re working toward a certain goal can help keep you more accountable.
- Reward yourself when you reach milestones. Paying down debt is a journey. You’re taking steps to build a brighter financial future, but it’s not always a speedy process. That’s why it’s important to build in rewards as you go. You’re more likely to keep moving toward your end goal if you celebrate meeting the smaller milestones along the way.
IMPORTANT: Be sure your rewards don’t put you back on the path of building up more debt. Consider perks like spending extra time on one of your favorite hobbies, taking an afternoon to explore a local sight or finally finishing the novel you’ve been reading, instead of rewarding yourself with a new purse or the latest smart phone upgrade.
Paying down debt consistently ranks as one of the top priorities for many Americans. By following these simple steps, you can confidently walk away from carrying too much debt, so you can concentrate on other goals instead.