Have a credit card debt? Here’s how you can be debt-free in 12 months
There could be several reasons why people usually decide to get a credit card. To get discounts on vouchers, build credibility, improve their credit score, etc. However, the same credit card, if misused, can lead one to land in a debt trap. Result? Higher interest rates and penalty charges. Hence, whether getting a credit card is worth it or not will always stay debatable, but if you are in a debt trap, there are ways to get out of debt. Being aware is one step. Here are a few simple steps and strategies that you can employ to reduce your credit card debt.
Squeeze more savings out of your monthly budget: Take a close look at your monthly spending habits and analyze what you can cut down from the list. You can use many budget tracking apps to understand where your dollar goes. You might think how a small cut, for, say, $200, will help you pay the debt, but by the end of the year, you would have saved $2400 that can be put towards paying your debt.
Avail of consumer credit counselling: If you are struggling to pay your bills and falling behind, consider availing of consumer credit counselling services for debt advice Canada. They will assess your financial situation and provide options. A credit counsellor is equipped to educate you on how to manage your money better. Some of the best counsellors will help you find alternatives to bankruptcy. These agencies work directly with your lenders to save money on interest and fees.
Consider a Debt Consolidation loan: Some of the banks might offer a better deal if you compile all of your debt into a new loan called a debt consolidation loan. This can help you repay your debts at a lower interest rate saving you money over time. It allows you to combine multiple credit card debts and make just one monthly payment instead of various payments.
Automate your debt payments: One of the assured ways to be debt-free is not to create any more debt. Putting your payments on auto-pilot mode will help you pay off bills before the due date, which in turn enables you to avoid penalty charges.
You could try making extra money with a side hustle: To ensure you are able to clear your debt within the stipulated period, you could devote a few hours of your day to some side hustle. The number of hours, of course, depends on the kind of job you currently have and how much free time you have outside of work. For example, if you could earn an extra $500 per month in 12 months, you would be able to pay off an additional $6000 of debt.
Pay off the debt with the highest interest rate: Do you know by paying off the debt with the highest interest rate, you can reduce your total debt load and save on interest payments in the long term? This will help you pay down the principal faster and reduce interest payments.
Drop expensive habits for a while: Even you know weekly outings can be costly. By limiting yourself, you can stay within your budget and save $1000s every month that can be put towards repaying your debt.
Creating a plan to clear off debt can give you a fixed timeline and help you limit monthly expenditures. If your debts have become too stressful, making you feel overwhelmed and not want to declare bankruptcy, you may want to consider consumer credit counselling services. They can help you draft a debt management plan and even talk to lenders on your behalf for an amicable solution.