Just with a click of mouse at google, you will see tremendous good advise with enough reasons why you need to cut your credit card. And began living below your means. And never try anything like debt for life.
Yes, will know that debt is not good if use wrongly. But at same time debt can be your greatest leverage. In building wealth. And also most of the time will focus all our energies, on how to cut expense and live below our means. When those precious time could has been spend learning how to build passive income for life.
Debt can be your greatest weapon in wealth building. If only you know how to use it. It was mine, and so can it be yours. But if your dream is to retire poor and then try to depend on the government and your children to take care of you, when weakness come. Then will can’t be your best friend.
But what if you are drowning in bad debt? Like credit card loan debt? You are not alone this post can help you out. American households with credit card carry on average balance of $14,564! Yes, it’s true but this can’t be your story anymore.
Our below strategies can help you on the process of eradicating your credit card debt so you can began building wealth.
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1.Don’t use credit card has a revolving debt instrument:
It is entirely possible to use credit card regularly and stay out of debt forever.
How? By only charging what you afford to pay when the bills arrives. Use credit cards as a payment tool, not as a revolving debt instrument.
To make this method work you’ve got to track charges and cash flow.
2. Target one debt at a time:
Do you carry a balance on more than one card? If so, make sure you always pay at least the minimum on each. Then focus on paying down the total balance on one card at a time. You can choose which card you target in one of two ways.
- Check the interest rate section of your statements to see which credit card charges the highest interest rate, and concentrate on paying that debt off first.
- Paying off the card with the smaller balance first. Then take the money you were paying for that debt and use it to pay down the smallest balance.
3. Focus on why:
Address the reasons that you want to knock out your credit card debt.
The primary reason to pay off your credit card debt is so you can began building wealth.
4. Prioritise your debts:
If you have debt on more than one credit card, you’ll need to work out which one to pay off first.
And you should focus on the most expensive credit card first.
If, for example, you owe $1,000 on a card charging 19% interest and another $1,000, On one charging 34% interest. you need to concentrate on the one charging 34% first and pay off as much as you can.
Once the debt is cleared from that card, you can then look to pay off the credit card charging 19%.
Make sure you continue payment on each card. Otherwise missed payments will lead to extra fees and could damage your credit score. Making it more difficult to get credit in the future.
We you actually spend more with a credit card?
Credit card users can avoid overspending by keeping a monthly budget. And tracking their spending diligently-just like people who don’t use cards.
Though several studies do support the motion that comsumers paying with credit cards typically spend more than those using cash. E.g a dun & Bradstreet study that concluded that users spend more on average than those who carry only cash. The study said this is the case because it’s more psychologically painful to hand over cash than it is to swipe a card. Whether credits or debit.
There’s anecdotal evidence that appears to point in this direction, too. For instance, in 2004, when many fast food restaurants were just starting to take credit cards. Then-wendys CEO john schuessler reported that the average transaction for credit and purchases was $7, compared with $5 for cash purchases, a 40% increase.
Unless you pay back a credit card purchase immediately, you won’t feel the pain of the bill basically a month.
And also according to a report from the American bank, the average value of a cash transaction was $22, compared with $122 for non-cash transactions- 409% jump.
But despite the potential to entice overspending, credit cards still come with a long list of checkmarks in the “pros” column, in fact. If you can stick to a budget and get pay your cards bill in full and on time each month, you should probably use a credit card for most purchases. Responsible credit card spending I’d a Good thing. If you treat it like “real” cash and swipe only what you know you can pay back in full and on time, you can reap my benefits.
Know your limits:
Use your card until you’ve spend a self imposed limits, say $500, and then put your card away in a drawer until the beginning of the next month.
You see if you are disciplined enough, you can use a credit card as compliment to your budget. This strategy usually involved creating a written budget, and using your credit card for purchases until you work through your predetermined spending limits. This can help you stay on budget and on top of your bills while allowing you to maintain a larger credit limits that might be useful in an emergency.