How to Reduce Credit Card Debt Without Bankruptcy

$6,375. That’s the average credit card debt of an American in 2018. Total credit card debt just went over $1 trillion dollars in 2017. Credit card debt is a big problem for a lot of people and finding ways to reduce credit card debt came sometimes feel impossible.

While it might seem like declaring bankruptcy is your only option, there are a few other ways you can reduce credit card debt without that drastic measure.

Get Your Debts Organized

Make an excel sheet or write down in a notebook all the credit card debts that you have. Note the interest rates on each card, minimum payment, and due dates for each payment. Seeing all of your debts lined up will help you get a better sense of where to start.

Stop using your credit cards

We mean it. Find somewhere to put your credit cards so you stop using them. Some people put them in a safe, others do more unconventional things like freeze them in water in their freezers; however you choose to do it, stop using your cards. This will prevent the debts from getting higher.

Evaluate Your Current Budget

Look for any places you can cut. Do you need to be paying $50 a month for cable? Is it logical to keep getting that $5 latte everyday before work? Trim where it makes sense. This frees up extra money to start to reduce credit card debt.

Pay the Minimum Balance on All the Debts But the Smallest Debt

Look at all your credit cards and make sure that you are paying the minimum balance on each one. This keeps you in good standing and avoids any fees. Once you have those payments going, take your smallest debt and put all your extra income into paying it off. Keep your normal budget for the necessities: car, rent, groceries etc, but put everything else into reducing the debt on the first credit card.

Reward Yourself When You Reduce Credit Card Debt

When you pay off one debt, reward yourself. Try to not purchase more things. Instead consider going out for a nice dinner with your friends or family or maybe treat yourself to a manicure. Focus on an experience and not a thing to help you repair your relationship with money.

Start Working on Next Debt and Repeat

Once you reduce credit card debt (or better yet, eliminated it) on one card, start paying off the next debt with the payment you were using towards the first card. Keep paying the minimum balances on the other cards if you have them, but now focus on the next largest debt. Repeat until all debts are paid off.

This systematic approach to reduce credit card debt can help you become more financial stable, develop a better relationship with money, and help you avoid declaring bankruptcy.


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