This year, Americans have endured unprecedented job loss, family hardships, and financial strain. Many have seen their wallet take a considerable hit that will inevitably require a long and arduous recovery. Some went above and beyond to stay afloat, racking up credit card debt along the way.
Millennials are especially affected. Americans in their mid-20s are putting off higher education and moving back in with their parents while financial issues are preventing individuals in their mid-30s from buying homes and expanding their families.
If you are one of the many Americans who has racked up considerable credit card debt to keep your head above water through this tumultuous year, you’re not alone. Most Americans have debt, and nothing is as important as assuring the health and safety of yourself and your loved ones. If you are one of the many Millennials feeling trapped by a mountain of debt, there is a light at the end of the tunnel! Let’s explore some tips to ditch the debt and keep it off, even after the pandemic.
1. No More Swiping Sprees
If you want to see your debt melt away, you can’t be constantly adding to your credit card balance each month. Mindlessly swiping a credit card at the register is ingrained in our brains and can be a hard habit to break, but you’ll never be free from the cycle if you are using your credit card for every purchase and increasing your debt. Try using your debit card, taking out cash, or leaving your credit card at home altogether.
2. Budget Budget Budget
Creating a budget and sticking to it is one of the best things you can do for your current and future debt. Many who use credit cards for all their purchases do not have an accurate picture of where their money is going, and a budget can help you monitor your cash flow and decide if there is any fat to trim from your spending. A budget app can help you lay out all your account information and gain perspective on where your money is going.
3. Get A Loan
It is hard to know when to ask for a loan, whether from a bank or payday lender. If you need cash quickly and you’re in a bind, you may consider a payday loan as they are easily accessible and you can find fast payday loans online regardless of your credit score. This is a great option if you are trying to pay back a family member who lent you money earlier in the year or pay off a small credit card balance quickly to avoid fees before payday.
Before you take out a loan, be sure you are able to pay it back as quickly as possible. These loans are wonderful in a bind but do come with high-interest, and if you leave a loan unpaid you can accrue even more debt and enter a dangerous cycle.
4. To Consolidate Or Not To Consolidate
You may be tempted to consolidate your debt, but consolidation is not always the best option for everyone. Keeping multiple cards open shows you can pay the balance and keeps your credit score high while consolidating or closing a credit card can potentially lower your score. Focusing on paying off each credit card individually can help the process feel more manageable and inspire you to keep going.
5. Make A Plan
Make a plan and be proactive about crushing your debt. If you are only paying the minimum amount per month, you are never going to see a light at the end of the tunnel. After creating your budget, take note of how much money is left over and consider funneling a chunk of that into your monthly credit card payment. For example, if you start paying $200 per month on your balance, you will get out of debt a lot sooner than paying the minimum $25.
Bonus: I recommend paying that “new monthly minimum” you have created to your balance immediately after payday so you’re not tempted to spend it!
Whether you are living back at home with mom and dad, taking a semester off school, or trying to raise your credit score to purchase your first home, there are options for all Americans (even Millennials!) to ditch the painful pandemic debt and still come out on top.