We are at the beginning of a New Year and a lot of us have already concluded our personal wish-lists and New Year resolutions. If you’re one of those card users who left 2009 in a pile of credit card debt, a great New Year resolution should include substantially reducing this debt. The following items below will put you on the right track or recovery, and they could prove to be very useful as you go to into the rest of 2010.
Dont Do Anymore Digging
Having a $10,000 balance on a favorite credit card and still charging expenses on such card doesn’t just sound right. You might think you’ve outsmarted the credit card company by incurring such large balance –since you can always pay little by little – but you’re dead wrong. The number one problem of people who run into debt problems is they all too more often than not continue to dig themselves in debt even when they’re aware of it. Having defaulted on a high credit card balance, you simply need to “stop” charging expenses on that card else interest and late fees might nail the coffin.
Live on a Budget
By living on a budget, you need to create one if you don’t already have one. The article on How to Live within a Budget has more details on this. As itemize expenses, don’t dole out a substantial part of your income to debt repayment.
Pay Heavily Regularly
The bulk of Americans in debt are in debt not because they haven’t paid back the equivalent of what they purchased but often because interest rates, late fees, and other charges are preventing them from attaining the debt free status. When coming out of debt, the best advice anyone can give is to pay back as much as you can. Following the good old “I’ll pay the minimum amount every month” strategy doesn’t work in this case, it’ll probably take you 3 times longer to pay for you owe, not forgetting you’re always gathering up interest along the way.
In short, if you can afford to do so, find a way of paying up your credit cards in full from the minimum balance to the highest balance. This is where a budget and prior planning come in handy.
Earn Additional Income
Additional income is often too necessary when steering clear of debt. Since your present income might not take you to the ‘break-even’ point, earning additional income becomes a priority. Extra funds don’t always to come from a full-time job. You could go part-time, or even do a few jobs on freelance basis. The point here is to find something you are good at and take advantage of it. If you’re good at packaging gifts, you might want to offer this as a service to interested neighbors. Freelance writing and photography during the festive season are likely avenues to earn an extra buck.
Believe it or not, staying debt-free is going to require some innovation on your part. You’d have to sit back and reason out those expenses that aren’t really necessary. This might be a difficult task but with sincerity and a willingness to reduce your debt into the New Year, you’ll find out a long list of items you can do without but never thought you could.
Lastly, reduce your credit card debt in the New Year can only come when you feel dissatisfied about your current situation. Some call it being “Angry” with you for owing so much. Which ever way, you just need to create an atmosphere where you feel the urge to get out of that predicament. As you begin to do this, you can then motivate yourself to following up on all the tips listed above.
Living a life free of debt gives you that feeling that can’t be explained in writing. Just imagine how must have felt with the birth of your first child, or after graduating from college. The feeling of accomplishment is all you should need to leave your card in your pocket or consider carefully before making impromptu purchases.
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