Seven tips for managing credit card debt


Credit card debt is something that lingers with millions of Americans nowadays. The average household with debt carries $15,762 in credit card debt. It is easy to say that we should just pay off our balances and free ourselves of the financial and emotional burdens that come with financing many aspects of our life. But it is not that simple.

The amount of debt might seem overwhelming, but you can manage your debt better. Here are seven suggestions to help you think through what's best for you and your money.

1. Come clean about spending.
There are many reasons that debt can pile up. Paying it down does not have to be difficult, but you have to be honest about your spending. Gather all of your credit cards, auto and student loans and other debt information. Then make a note of the following: the balance, interest rate, payment minimum, due date and how long it will take to pay off the balance on each. This step will give you a clearer picture of your finances.

2. Stay positive.
Rather than fret and moan about your debt, try to picture how your life will improve with less. Then get practical: Set specific financial goals with a focus on debt reduction. For example, "I plan on paying off all of my debt of $25,000 in four years. I plan to do this by paying $500 on my credit card bills every month and by not taking on any new credit until all of my current debt is paid off."

3. Automate your payment plan.
Set up automatic payments on as many of your credit cards and loan payments as you can. This way, you can avoid high late fees. This is a good option if you do not have time to pay your bills or you are prone to forgetting to pay them.

4. Prioritize.
Prioritize what you can pay if you cannot pay down all of your debts each month. Give high priority to debts that are secured by a house or car, utility bills, student loans and other important debts. Then focus on unsecured debt like credit cards. You should focus on the credit cards that have a high interest rate first.

5. Pay as you go.
Start paying with cash more often rather than with your credit or debit card. Paying with cash will help you keep track of where your money is going. It may also reduce impulse purchases.

6. Save more money.
Put some of your income toward debt reduction. Use a spending calculator or a budget to help you discover where most of your money is being spent and use those funds to reduce debt quicker. For example, ask yourself if you really need cable when you have Netflix. Budgeting is not easy, but if you can cut costs, you will be able to pay your debt a lot quicker.

7. Save for retirement.
Do not forget about retirement. Focus on your retirement savings, which can contribute to your debt reduction. Contribute something to your retirement accounts every month. They can be used to pay off some of your debt.


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