If you’re anything like the majority of people then you probably racked up at least some, if not a lot of credit card debt this holiday season. It’s inevitable and hard to avoid but it’s not impossible to fix. Ringing in the new year while stressed about your credit card debt is probably not the fun time you had in mind. Start today by creating a plan of attack before New Year’s Eve, that way you’ll be able celebrate without the worry and stress hanging over your head the whole night. Starting as soon as possible will not only give you peace of mind but will save you money on interest and potentially help your credit score improve. Here are the top 5 ways to start planning your 2015 debt repayment plan.
1. Put Down the Credit Cards and Walk Away
The first and most important thing you need to do it stop using your credit cards, if you have a significant amount of debt then you need to stop adding to it right away. Continuing to charge purchases will only make your situation worse and potentially make it impossible to become debt free in 2015. The convenience of credit cards is often what gets people into trouble, so leave your credit cards at home starting right now. Switch to your debit card or cash to pay for daily expenses. While you might be tempted to charge a few things from time to time because you know you can afford them, it’s the interest that you need to watch out for. It’s your best bet to simply not charge anything until you’ve got your repayment strategy in place and are making large payments on a regular basis.
2. Combine Your Debt Onto One Card
This might not be an option for everyone, but if it is then we suggest that you start looking into it right away. Making several small payments to several different credit cards all with different rates and balances is like digging a hole with a spoon, it’s going to take a long time and be extremely frustrating. It’ll take you years to pay off debt this way and we’re looking to see progress in 2015. So to help with this problem you should look into a low interest credit card with a low balance transfer fee. Unfortunately most credit cards charge a fee to transfer balances so it’s up to you to decide if it’s worth the money. Do your research and shop around; this is a decision that needs to have some though put in to it. If you do decide to transfer all your debt onto one card then making one payment a month will be much easier to handle, plus with the lower interest rate you’ll have the opportunity to become debt free sooner.
3. Budget, Budget, Budget
Budgeting is your best friend when it comes to credit card debt repayment. You won’t even make a dent in your debt if you don’t have a detailed budget. Sit down with all your bills and statement and create a detailed and realistic budget for yourself, be as thorough as possible and try to account for all possible situations. Life happens and it can be extremely difficulty to actually stick to a budget if you aren’t prepared. Set goals and use them to keep motivated, you’re the only one that’s responsible for your debts.
4. Create a Schedule and Stick to it
Once you’ve made a budget and have all the numbers written down you need to make a payment schedule. The goal here is be pay off all of this year’s holiday debt before then end of 2015. Based on your budget figure out how much you need to pay each month to be debt free by Christmas 2015 and start making payments right away. With a schedule you’ll be able to track your process and see how much debt you’ve paid off compared to how much you have left. This can be incredibly motivating, so stay organized and be proud of yourself every time you make a payment.
5. Make Payments Often and Early
It’s important that you stick to your schedule and make your payments on time and in full, but your schedule isn’t written in stone. If you happen to have some extra cash one week then do not hesitate to put it towards your debt. You should also schedule payments close to your payday even if it makes your payments early. Remember you’re constantly being charged interest so making as many payments as possible is to your advantage. No one ever said you’re only allowed to make one credit card payment a month, so make several and make them count.
Devoting your whole year to paying off holiday credit card debt probably seems like a lot of work to you and it is, but it will all be worth it in the end. Once you’ve made your budget and schedule and implement them into your daily life your debt repayment will become second nature to you and you’ll be on your way to being debt free in 2015.
