Pay off Credit Card Debt Fast: 7 Ways to Kill Unsecured Debt for Ever
I have some great news for you! you’re going to take the next step to become debt-free just like ME! Let me go through this case study with you.
A credit card or unsecured loan is issued to us to allow us to pay a merchant for goods and services depending on our promise to pay the creditor the full amount plus the agreed charges and interest rates. For some individuals, credit cards can be a controversial subject, according to Experian, audits in the U.S. have an average of 2.4 credit cards, that is insane!
I was in some of your shoes seven years ago. I got very excited and applied for four credit cards to help build my credit history. I knew that having a strong credit history will help me buy a house and a nicer car so I went ahead and started using them. I knew the perks of having credit cards are great but as long as it’s manageable to finances and monthly expenditure otherwise you will fall into a bigger hole before you know it. Just like me, despite all the good things about having a credit card, there are lots of other factors we should know, like the high fees that they charge and interest over interest charges, but oh well, lesson learned!
Even though I am 100% debt free now, I ended up falling into 35,000 dollars in credit card debt, after paying one year of minimum payments to my creditors and realizing I have paid over $7,950.00 dollars towards interest rate in just one year alone! I realized that NONE of my balances were going down and I just had enough of it.
The main problem is that you have enough money, but you do not have enough money to pay a compound interest rate, over and over.
what is compound interest? Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest.
You will never be able to pay off your credit card balances if you continue paying your minimum payments on compound interest and still using the cards while you’re making 95% of the payments towards interest rate to big pocket banks!
what do you do next?
- Manage your bills and budget yourself.
- Understand the compound interest rate and don’t buy anything unless you can pay off your cards within 60 days.
- Consult with a professional but before you do that, I will go over some scenarios here that can help guide you in the right direction.
- Debt Payoff Calculator
“How Do I Pay off Debt If I Live Paycheck to Paycheck?”
Maybe a fresh start or you have to step back and restructure your finances and habits!
Ready for the surprise tips? Let’s take a ride!
Ways to Kill Debt for Good
As I walk you through the seven steps, you’d develop the necessary debt payoff methods needed to free you from debt.
This is the beginning of your journey to a loan-free lifestyle.
1. Begin With a Minimum Needs Budget
A minimum needs budget aka basic needs budget shows that all it takes for a family of four to survive is 1.5 to 3.5 times the official poverty line.
This means $22,050 would cater for a family for a year.
Drafting a minimum needs budget is the first step towards paying off your loans regardless of your income. I’ve written an easy-to-follow guide on how to draft a feasible family or personal budget.
Cut unnecessary expenses by taking a deep look at; housing, car expenses, and food cost.
This is best done by reviewing your monthly expenses and detecting the loops in your spending habits. If cutting down on food costs, getting a roommate or selling your car for a cheaper one would help you get rid of debt, do it.
Devise a better way of saving cost on all your expenses.
2. Make Extra Money From Freelancing or Side Jobs!
The best way to pay off debt is to make more money. And you can do this by freelancing.
A freelancer could be a full-time self-employed pro or a regular worker with a side hustle.
In your case, we’d recommend adopting freelancing, as a side hustle.
There are sites that would pay you cash via PayPal for completing a survey. For instance — Survey Junkie, InboxDollars, mySurvey, Swagbucks, Prize Rebel, Global Test Market, Vindale Research, Pinecone Research, and Opinion Outpost.
We recommend these freelancing sites because they might help you free up funds to swing at your debt.
3. Maximize Your Debt Payments
A lot of people think paying their debts bit by bit is a great idea. But the reverse is true.
If you make the minimum payment, the smaller part of it is added to the credit balance while most of it goes to the loan interest.
The more you play, the higher the momentum. For those who have low-income, it’s important to reduce the interest rate on the lowest balance.
On lowering your interest rate, you’ll be able to add more money to the actual debt instead of interest rates.
Let’s say you’re expected to pay 15-20 on your credit cards, Avant can assist you in lowering those rates by 50%.
Reducing your interest rate by half would go a long way in catalyzing the debt repayment process.
4. Save, Save, and Save
The major reason for cutting costs on all expenses is to increase your savings. Though it may sound difficult, it’s simple when done the right way.
Always set aside some amount of money from your paycheck before spending or giving out money. Saving keeps the credit card away, during emergency situations.
There are some savings accounts that help you automate your savings with no minimum balance requirement. Open such an account in any bank of your choice and save money, no matter how small.
5. Stay Away From the Things That Triggers You to Spend
Triggers are your weak points that force you to spend unnecessarily, especially when you’ve got loans to pay off.
You have to discover your triggers and set up a system to nullify it. Honestly, this requires much energy, but it’s worth the stress.
My trigger was my girlfriend😂 Hell yeah! I love spending when I’m with my girlfriend. But I had to make myself unavailable anytime I wanted to cut my ‘relationship costs’
Check if you qualify in two simple steps
- Step 1 – Select your debt amount below to see if you’re eligible
- Step 2 –Answer a few quick questions & join hundreds of thousands of Americans on the path to becoming debt-free
6. Apply for Debt Relief Programs
As the name suggests, Debt relief programs are government programs aimed at helping government workers pay their student loans.
The difference between private and government relief programs are;
- Private programs convert government debt to private, thereby nullifying your right to government debt relief programs pending the time you’re debt-free.
- Though your credit score plays a critical role, private debt relief programs are easier than PSLF.
- Private interest rates are relatively higher.
- Most private companies offer refinancing instead of loan consolidation. Loan refinancing and loan consolidation are two different programs. Loan refinancing gives you the privilege of renegotiating the loan terms, such as interest rates and duration.
To qualify for government aid, your credit score must be on par. Every debt relief company (private or public) has its own rules and regulations. Ensure you read the terms and conditions before applying.
We’ve written a guide on the list of debt settlement companies and how to apply.
I’ll like to know your trigger. Drop yours in the comment box and share how you overcame it.
Thanks for reading!
Originally published on 5.19.2019, Updated by Anthony J on 7.10.2019