Top Tips: Getting Out of Credit Card Debt With a Job
Credit card debt can feel like a black cloud hanging over your head for many years. Now that you have a steady paycheck, you can set up a plan for spending, saving and paying off debt. Here are some top tips to getting out of credit card debt with a job:
- Create a budget. Being intentional with your money can get you out of debt faster. Make a new budget each month. The first step is to record your net income for the month (money left after taxes). Second, list all of your expenses. This includes rent, food, insurance, car payments and entertainment. Part of your budget should include paying off a portion of your credit card debt, at least the minimum. It might be helpful to use a program like Excel, EveryDollar or Monefy to make a spreadsheet of what you will spend and what you will save. You can also use good old fashioned pen and paper. Try to follow the 50-30-20 rules: 50 percent of your income to needs, 30 percent to wants and 20 percent to debt repayment and savings.
- Cut out unnecessary spending. Now that you have a steady paycheck and more money coming in, try not to spend it all. Look over your past bills and budget and consider each cost carefully. Ask yourself if you can spend less on certain expenses or even do without them entirely. Maybe you can eat at home more than you eat out, or you can go with fewer trips to the coffee shop. Any place you can cut back leaves more money to pay off credit card debt.
- Keep tabs on your debt. List all of your credit card debt and keep an updated record of how much you owe. Record interest rates as well. The longer it takes to pay off the debt, the more interest you will have to pay. Getting away from paying interest is one great reason behind getting out of credit card debt with a job.
- Choose a strategy. If you have multiple sources of debt, there are three main strategies to paying it off. The first is the snowball method: Make all of your minimum payments and put any remaining money towards the card with the smallest balance first. The second strategy is the avalanche method: Make minimum payments and then pay extra to the card with the highest APR. This strategy can save you more money in the long run. The final strategy is the blizzard method: After making minimum payments, pay off the smallest balance and then the highest-interest balance (combine the snowball and avalanche methods).
- Use a debt management service. Take advantage of professional help. Companies like Trinity Debt Management can help you make and stick to a plan for getting out of credit card debt with a job. With help, you can become debt-free faster with less stress. Trinity promises to free you from debt in just three to five years.
Understanding Your Credit Score
If you have a credit card, you need to monitor your credit score. A credit score is a measure of how likely you are to pay back a loan based on your credit history. It’s on a scale of 300 to 850; the higher the better. Factors that impact your credit score include payment history, amount owed, credit history and credit mix. Get one free report of your credit score yearly from each of three main credit reporting companies, or visit independent sites such as CreditKarma or NerdWallet.
Are You Getting Out of Credit Card Debt With a Job?
It is exciting to hold a job. You should celebrate your success, but remember to keep your wallet happy. Consider partnering with our Dream Coach in the American Dream Program to get further financial assistance and work toward living debt-free.
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