• Face Your Fears and Tackle Your Debt

    credit card

    After my husband lost his job, we relied on credit cards for everyday expenses like groceries and rent. Then, he started a business and charged supplies. Five years later, we’re still sitting on credit card debt, and I’m afraid.

    I’m afraid to open the credit card statement because we pay only the minimum amount due, and I know the balance barely moves down each month.

    I’m afraid we’ll always struggle to make ends meet as our credit card payments line someone else’s pockets.

    I’m afraid that one day, the debt will win and we’ll be left to drown under it.

    Can you relate? I know I’m not alone because recent statistics show that the average household credit card balance hovers above $15,000. However, I recently decided to face my fears and tackle the debt. After all, it’s just money, right? Here are the tips I’ve been using to face my fear and tackle debt, and they might help you too.

    Throw Snowballs

    Wintertime snowballs won’t help you repay debt, but the snowball principle will reduce your debt at a steady pace.

    1. Start by listing your debts. Include the amount you owe, the interest rate you pay and the estimated repayment date.
    2. Every month, pay the minimum amount due on every debt except the one with the highest interest rate. To that monthly payment, add as much extra money as possible. Work bonuses, second job income and sofa coins count as extra money.
    3. Continue to repay that loan aggressively until it’s completely repaid, and then do a happy dance, treat yourself (more on that later) and begin aggressively repaying the debt that now has the highest interest rate.

    As you repay each debt, the amount of money you can apply toward repaying existing debt grows like a snowball. For us, the snowball principle gets us out of debt – including our 25-year house payment – in less than seven years. Remind me again of why I was so afraid of debt?

    Write a Dream List

    What would you do with an extra $1100 a month? That’s how much I pay on all my household debts, and I can think of tons of things I’d like to do with the money.

    • Build a household emergency fund.
    • Fund my retirement account.
    • Donate more to charity.
    • Save and pay cash to replace our aging vehicle.
    • Work less and play more.

    Your dream list may look different than mine, and that’s okay. The important thing is to carry a copy on the inside of your wallet. Every time you feel tempted to pull out the credit card, you’ll see your list of dreams and remember why you’re getting out of debt.

    Treat yourself

    I told you we’d get to this part, and here we are – the dessert. Now that you’re facing your fear of debt and have started to make a dent in it, treat yourself with a reward. It could be something as simple as taking an entire day off work to read a book in the backyard or splurging on a meal out with your spouse (go at lunchtime when the prices are cheaper for full meal portions).  You deserve a treat because you are tackling your fears and taking control of your finances.

    With these tips, you, my friend, are on your way to financial freedom. Aren’t you glad you bravely faced your fears of debt?

    By Jen T. Free Stuff Finder Contributor

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