by Maurie Backman | March 11, 2020
Does it top your list too?
Most of us have made some sort of financial move or decision we've later regretted. Maybe you spent too much on college and are drowning in loans after the fact. Maybe you bought too expensive a house and have struggled for years to keep up with your mortgage payments. But although these mistakes are regrettable, there’s a bigger problem keeping U.S. folks up at night. According to a recent survey by Policygenius, 24% of Americans say racking up credit card debt was their single greatest regret over the past decade.
If you're kicking yourself for having accumulated a whopping credit card balance, you can take some comfort in the fact that you're not alone. But more importantly, you should take steps to pay off that debt as quickly and efficiently as possible.
If you're eager to bust out of credit card debt, you'll need money to do so. And that could mean seriously cutting back on living expenses to free up that cash.
To get started, take a look at your monthly budget, or create one if you don't have one already, and see where you're overspending. There may be certain recurring bills you're on the hook for that aren't negotiable (or least not immediately), such as your mortgage or student loan payment. But if you're currently spending $100 a month on cable, $120 a month on store-bought coffee, $200 a month on leisure, and $180 a month on restaurants and takeout meals, that’s as much as $600 you can save.
Let your amount of debt dictate how drastically you should alter your lifestyle. If you're $10,000 in debt and really want to pay it off in a year, you'll need close to $1,000 a month in savings. If that's the case, completely eliminating those expenses above will put $600 back in your pocket on a monthly basis, getting you more than halfway there. (Keep in mind, while you're paying down that debt, you'll continue accruing interest on it. So unless you manage to pay $10,000 today, you'll actually need more money to become debt-free.)
How can you make up the $400 difference? One way is to get a second job, whether it's driving for a rideshare company, babysitting, or doing some type of work online. If you're able to earn an extra $100 a week, you'll be on track to pay off $10,000 in debt in a year, provided you also free up the $600 a month we just talked about.
Once you're able to free up money to pay off your debt, you'll need to start chipping away at your various balances strategically. You can start by seeing if you qualify for a balance transfer. With a balance transfer, you get to move all of your existing balances onto a single credit card with a lower interest rate and then pay that card off. Some balance transfer cards offer 0% introductory rates, which makes things even easier on you.
If a balance transfer isn't an option (say, because you don't have good enough credit to qualify), figure out which one of your credit cards has the highest interest rate, and pay that one off first. Then move on to the next most expensive card and keep working your way down.
If you regret getting into credit card debt, don't waste too much time beating yourself up over it. Instead, focus your energy on solving the problem at hand. With any luck, you'll be debt-free before you know it.
At the same time, take steps to avoid getting back into debt. Stick to a budget and avoid spending your entire paycheck month after month. In fact, you should build some emergency savings so you won't be forced to whip out a credit card when unplanned bills land in your lap. Coupled with mindful spending, that should spare you the hassle and guilt of dealing with credit card debt ever again.
If you have credit card debt, transferring it to this top balance transfer card can allow you to pay 0% interest for a whopping 18 months! That’s one reason our experts rate this card as a top pick to help get control of your debt. It’ll allow you to pay 0% interest on both balance transfers and new purchases until 2022, and you’ll pay no annual fee. Read our full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.