Having debts often makes your economic condition unstable, even more if the debts are piling up. These debts are definitely disadvantageous to you. In the other hand, you cannot avoid making debts because you need the cash for your needs. In this article, we will talk about how to pay off credit card debt fast.
If you have debts, do not wait until they pile up to start paying them off. Whenever you make a credit card debt, pay it off as soon as possible. Remember, these debts bear interest. Here are the tips to pay off credit card debt fast.
How to Pay off Credits Card Debt Fast
- Do not make any more debts and estimate the budget
If your debts exceed the ratio of 30%, then the next thing you have to do is not adding more debts. You will need to prepare the budget to pay off the debts. Try to limit your spending in order to pay off credit card debt fast.
Double-check your holiday plans or a plan to buy a new car, and everything that adds a substantial amount of spending. Cut off your expenses to start paying off your credit card debts. It is even better if you can get an additional source of income.
- Make a list of your debts and check the ratio
List all of your debts, calculate the total amount and compare it to the total of your income. If it exceeds 30% of your income, this is called a consumptive debt. The ratio of your debts to income should be 30% or less. When the total of your debts exceeds 30% of your income, it will be harder to pay off credit card debt fast.
After that, compare the income to your assets, not including assets that haven’t been paid off. Do this to know your ability to pay off your debts.
- Calculate the value of your assets
If your debts exceed 30%, try calculating the value of assets you have. Since it is better to lose some things temporarily than having debts that bear interest, you can try to sell some assets, such as a motorcycle or a car to help you pay off credit card debt fast.
- Pay off the consumptive debts first
It is best to pay off the consumptive debts first because they bear a high amount of interest. The longer you wait to pay them off; it will be harder to pay off credit card debt fast. Try to pay around 10% of initial usage, assuming the interest rate is 35 per month. You might be able to finish paying off your debts in 24 months.
- Make second thoughts before making another debt
Basically, your ability to pay off debts depends on yourself. Before using your credit card to buy something, make sure you really need it.
Now start using your credit card responsibly. Don’t forget to limit your expenses. After reading this information on how to pay credit card debt fast, hopefully you have a view of ways to avoid debts in the future.