It’s all too easy to rack up credit card debt during the holidays. If that has happened to you, don’t panic. While it’s much easier to dig yourself deep into debt than it is to claw your way back out, there is hope. If you create and follow a strong debt-reduction plan, you’ll be back on your feet in no time. Here’s how to do just that.
Pick a Lane
The first thing you should consider is which debt reduction strategy you want to use. The best way to do that? Pick the one that you are most likely to stick with. Here are the two most common debt payment strategies:
- Snowball method. With the snowball method, you start by listing all of your debts in order of least debt to most. You then start paying off the debts in that order. The theory here is that the feeling of accomplishment helps motivate you to keep going.
- Avalanche method. Similarly to the snowball method, with the avalanche method, you list all of your debts. However, with this method, you list them from highest interest rate to lowest and pay the debt off in that order.
Now that you have your debt payment strategy selected, it’s time to revise your budget. Go through it and trim all the fat possible. Take all that extra cash and funnel it toward your credit card debt. There will likely be some hard choices with cutting expenses, but remember, this can be temporary. Once the debt is paid off, you can readjust your budget.
Another option that can help you get out of debt quicker could be a special balance transfer offer when you open a new credit card. For example, an HCU Your Rewards Visa offers 0% APR for 12 months when you open a new card and transfer a balance from a non-HCU card. This means that 100% of what you pay each month for a year goes to paying down the debt. If you try this option, make sure you don’t use the new card for purchases until the balance transfer is paid off. The goal is to get out of debt, not create more of it.