The path to financial freedom is often scattered with bumpy roads. No matter how hard you try, you may encounter difficult financial times at some point in your life. Credit cards, while a blessing to many, can wreak havoc on your credit score if not cared for properly. Some debt recovery agencies, like Wescot, can prove invaluable in getting your finances back in order. Connect with them through Pinterest or other social media to ensure you are back on track in no time. The best way to avoid financial downfall is to arm yourself with money-saving tools way ahead in the game.
Cut Yourself Off
If your debt has accumulated beyond plan, you may begin to feel trapped. This is not uncommon. Once you’ve realised that you’re in financial trouble, it’s time to put a plan into action to ensure it doesn’t further spin out of control. Commit to avoiding borrowing money until you get your finances in order. Cut up all of your credit cards, except for one for emergencies. Do it now. If that’s out of the question, simply store your cards in a glass of water and stick it in the freezer. The impulse to buy will more than likely pass by the time the ice melts. A bit silly, but it works. Ridding yourself of the temptation is the best way to begin your recovery when you’re far down the debt hole.
Don’t Make the Minimum
Did you know that a £5,000 balance can take over 30 years to pay off when making the minimum payment? Yes, really. Interest rates are ever rising, making cleaning up your financial messiness even more difficult. You must pay more than your card’s minimum payment if you want to settle your debts in an efficient manner. Pay as much as you possibly can per month in order to avoid sky-high interest. This is just one great way to avoid mounting debt.
Low interest rates are imperative to managing debt. Don’t be afraid to switch credit cards if it means re-negotiating interest rates. You may have become accustomed to tossing out credit card offers once they pile in, but consider applying for a 0% interest card and transferring your outstanding balances onto that account. This will give you a fresh start, free of interest, to get you back on track with your payments. It’s a lot simpler than it sounds.
Ignorance is bliss, but not when it comes to credit cards. It’s your responsibility to become familiar with the details of your card and how it works. From fees to interest rates and grace periods, there is much to learn about managing your card accounts. Arming yourself with knowledge is the best way to avoid a scare later on.
Credit cards are one of modern man’s greatest creations for more reasons than one. Aside from protecting purchases, building credit and being able to purchase things without cash, owning a credit cards paves the way for learning the intricacies of finance. Whether you’re dealing with two credit cards or six, you must be aware of what is at stake. Keep a log of each card, your balance and the interest rate on hand, so you can plan as much as you need to. While a fantastic financial tool, credit cards can wreak havoc on your money, as well. When used improperly and too frequently, credit cards can function more like a high interest loan than a cash substitute.
Having your debts in one place may seem intimidating, but it’s much simpler than having several open tabs on your browser, which can get confusing quickly. Arrange your payment priorities by interest rates. In order to rid yourself of financial debt, pay off your credit cards with the highest rates, then follow with the rest in a descending order.
Prioritise Your Debts
According to financial guru Suze Orman, all debts are created equal. Don’t place favours on the back burner. Whether it’s Visa you are dealing with or the money your sister lent you, treat all your debts with the same importance, though be smart about which should be paid first. Cards with the highest interest rates and balances should be paid before the others.
So you’ve paid off your largest balance – great! Pat yourself on the back, but not for too long. There is still much to be done. It’s time to apply that same monthly payment to another credit card.
Once you’ve gotten yourself out of the financial hole we call debt, you must take steps to avoid a recurrence. Make a promise to yourself to always keep your finances in order. Aside from caring for your health, this is the best way to secure a bright future for you and your family. By budgeting and staying organised with your finances, your shots at future financial freedom drastically increase.