The Best Way to Get Out of Credit Card Debt isn’t Always the Easiest
People use credit cards for all sorts of reasons. Some of us are materialistic and open new cards to satisfy our wants.
Some of us end up on hard times and use credit cards to live on until a better paying job comes along.
Many of us live paycheck-to-paycheck and use credit cards for emergencies (new tires, engine trouble, etc.)
Whatever the reason, you are probably feeling the pain of consumer debt. I was there once so I understand the pain all too well.
I vow to never place myself in that situation again. The road has not been easy but lessons were learned.
Here is my advice for getting out of credit card debt and staying out. It has more to do with your financial mindset rather than steps to pay down your debt.
I believe changing your mindset and increasing your financial education is the best way to get out of credit card debt and stay out of it.
What the Hell Was I Buying?
I applied and received my first credit card in my early twenties. I figured I had to start building my credit history.
I don’t even remember what my credit limit was. It didn’t take long for me to max out the card.
Over the years, I ended up with approximately 7 different credit cards, not counting department store lines of credit (Macy’s and such).
My balances were never paid in full. I didn’t miss payments so my credit score was high. All I believed was that I had to maintain a good score.
My financial education was lacking big time and I was financially out of control with my consumer debt.
Each time I applied for a new card it was for some dumb reason (I’m sure of it) and I promised myself I’d pay the new card off.
I was in major denial of the debt I was already in.
The Pain of Credit Card Debt
Even when I had decent paying jobs I was always broke. Most of my paychecks went to credit card payments.
Being much older, I began to loathe paying consumer debt that I accrued in my younger years. I didn’t have the income to pay extra on any of my cards.
I made minimum payments on all of them. It was a constant cycle of using the cards to live on and using my paychecks to make payments.
I didn’t see a way out of it. Looking back, there were so many things I could’ve done. I wasn’t aware of them at the time.
What I share below is what I would tell anyone who is in the situation I used to be in.
Accept Your Debt – Come to Terms with the Pain
Consumer debt just plain sucks. When you are in major credit card debt, it weighs on you each month when you make your payments.
Don’t walk around in denial about it. Face up to it and realize you are in debt. Add those card amounts up.
Put it into a spreadsheet and see the actual amount you owe on each card. Add up how much you’re paying each month to the credit card companies.
The reality of it is going to be a pain point. Use this pain point to your advantage to make a change in how you’re doing things.
The first step out is to know how much you owe.
Improve Your Financial Education
After reading the classic Rich Dad Poor Dad by Robert Kiyosaki, my views on what liabilities and assets are have changed.
I no longer view cars and a home as assets. If they pull money out of your income column each month, it is a liability.
I like Robert Kiyosaki’s method of buying assets to pay for liabilities. I was very materialistic in my younger days (thus, why I had so much consumer debt).
A lot of it had to do with being unhappy with my situation. Relationship-wise, job wise, etc. I sought happiness in liabilities (cars, clothes, electronics).
After reading Rich Dad Poor Dad I quickly realized what my problem was.
Cashflow Quadrant is another favorite by the same author.
It goes further into what liabilities and assets are and the way businesses handle money. It goes into the tax advantages of being a business owner versus an employee.
If you haven’t already, read these two books ASAP. If you can’t afford them, borrow copies from the library or check used book stores.
Some people have their negative opinions about Robert Kiyosaki’s money philosophies.
However, if you are in credit card debt, these two books will change your outlook on money, debt (good vs bad), assets, and liabilities.
Get Accustomed to Living On Cash
It is important to break the habit of relying on credit cards. As you pay down and pay off your cards, it is tempting to use them again.
Break the habit sooner than later. Paying cash for everything forces you to live on a budget.
You’ll think twice before spending money on frivolous items. You’ll also think ahead when it comes to important items and set aside money for them.
It is not difficult to get used to. However, if you let the temptation of spending on a credit card win out, you’ll find yourself back in the same situation.
I’ve done that too. You have to be disciplined about it. If you struggle, take credit counseling classes.
Read books on personal finance and educate yourself about the dangers of consumer debt.
If you do not close your accounts, at least cut up the cards so you don’t have access to use them.
Being Debt-Free and Building Your Assets Column
It can seem so far off to becoming debt-free when you have a lot of consumer debt. It took some time to get into debt and it will take some time to get out of it.
Depending on how hard you want to work will determine how fast you can pay down your cards. As you become wiser with your finances you can start increasing your assets.
One way I’m building my assets column is by creating “virtual real estate” with affiliate marketing.
Affiliate marketing is simply the promotion of other company’s products/services for a commission when a sale is made.
There is no inventory to buy, no customer service, and no limit on the amount of income that can be made.
I refer to creating websites as virtual real estate because the websites I create now will begin producing income in the future.
Anyone with access to a computer, the internet, and the ability to write about a topic they enjoy can do this.
I’m a firm believer about having a side hustle and affiliate marketing is a great one to have.
You can learn all about it by clicking the link below:
Best of luck on your journey to becoming debt-free!