If you have recently come to the realization that you are in debt far beyond your ability to pay off quickly, you are not alone. Statistics from 2015 show that on average each American household has close to ten thousand dollars on their credit cards.
If you remove from this equation those people who have no real debt, and that includes people who simply don’t have a credit rating, that number increases by several thousand dollars. If you are looking at some scary credit card statements right now, you are not alone.
But how can we get out of this kind of debt, outside of filing papers for bankruptcy? While we want to leave the legal route as a means of last resort, it is there and plenty of people do turn to it each year who have simply let their credit cards get out of hand.
But you can’t refile for eight to ten years, depending on the state that you live in. Unless you are getting royalties from an invention people can’t live without, say something like the Dynamics 365 sales software system, you might want to consider the strategies below.
Pay More than the Minimum
I know that it is tempting to just pay that little minimum payment that we all see on our statement, you have to do more if you want to get out of debt. These are meant to simply keep you in rotation, forever paying off the interest and never making much of a dent in your actual balance. Here is a simple example to help you understand why you cannot simply pay it off with the minimum payment.
If you have a basic credit card that has an interest rate of 15% APR and have an outstanding total of $15,000 you will probably see a minimum payment of $450 on that statement. Even if you upped that and paid $625 it would still take you a little over 13 years to pay it off. Obviously, it would take you longer, if you ever paid it off ever, at the minimum rate. And remember that this is if you never put another dime onto that card. The more you can pay off each month the better.
Move it All Over
If you have debt on several credit cards, and they have different rates of interest, move the balance on the higher interest rate cards to the one with the lower interest rate. You can get a better rate if you don’t have any frills on that card, no points for airplane trips or prizes. Moving the balance of all your credit card debt to one card with a low interest rate allows you to put more of your monthly payment towards the principal. This is, after all, your goal.
Ditch Those Expensive Cards
If you can, try living on cash instead of a credit card for the next year. It sounds horrible but it can be done. Some people simply use their debit card the way others use a credit card, keeping track of where their bank account is on a daily basis online.
It is so much easier to do this these days, where we can always know how close to the edge we are. Then put those nasty credit cards away somewhere where you can’t reach them, such as in your safety deposit box. When you are out of debt you can take one out for a breath of fresh air – providing you never get in debt again.