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How to get out of credit card debt

While it may be easy to get into debt, getting out of it is an entirely different story. Oftentimes people find themselves in immense credit card debt and feel the financial stress as a result. If you’re in this situation, don’t give up! There are ways to help reduce your debt; in this article, we’ll run through how to get out of credit card debt quickly and efficiently, which can also be used for personal loans, while sharing a story of how MyBudget clients Aaron and Jake managed to do so with the help of MyBudget.

How to pay off credit card debt

Acknowledge the problem

It might be tempting to hide your head in the sand and hope that your money problems will go away, but financial issues rarely fix themselves. In fact, while you ignore the problem, interest charges and late fees are usually snowballing and the situation is gradually getting worse. If you’re looking to know how to get rid of your credit card debt, then the first step for Australian consumers is to acknowledge the problem.

Expert debt help can save you thousands

The National Debt Helpline website and Financial Counselling Australia recommend that seeking assistance is an important early step in getting your finances back on track. It’s about having challenging conversations and asking others for their advice on how to get out of credit card debt.

We know that asking for help about how to tackle credit card debt can be difficult. Nobody wants to feel they can’t manage their own money. The fact is, however, that very few people have the right background, knowledge or experience to deal with a money crisis, let alone come up with a strategy. Financial counsellors are in business for a reason.

Set achievable financial goals

If you’re trying to find out how to get rid of your credit card debt and personal loan debt, putting in place reasonable and achievable goals is an important step. Working with a debt help expert also means that you can develop a customised strategy.

After all, every situation is unique and different. The best approach to tackle credit card debt is a tailored plan that relieves stress immediately and puts in place a workable, affordable way forward.

how to get out of credit card debt

When people come to MyBudget for a free appointment, we sit down with them, look at all of their bills and debts and come up with a detailed, customised plan that shows them how to solve credit card debt. Once we’ve created their long-range budget, we can then test different debt reduction approaches.

“The advantage of having your finances mapped out in front of you,” says Tammy Barton, “is that you’ve got all the information you need to make clear, well-informed decisions. The situation becomes less overwhelming and you can choose the best option for you.”

Work out your needs from your wants

One of the keys to getting on top of debt is to understand the difference between needs and wants and then keeping each other accountable to their budget. If you can’t afford it at the time, you can go without.

Budgeting gives visibility to see where your money is actually going. You may be surprised to see how “little” expenses add up to thousands of dollars a year.

Look forward to a debt-free future

When money management is done right, it produces the feeling of freedom. With a structured budget, plus automation of bills and credit card payments, human expertise to provide stress-relieving advice and support, such as talking with creditors or answering questions.

If you’re struggling with debt and constantly asking yourself how to get rid of your credit card debt, MyBudget client Aaron’s advice is, “Don’t be afraid to ask for help. It may be the hardest part of your debt-free journey, but it’s the most important.”

MyBudget clients Aaron and Jake on their debt-busting journey

Our clients Aaron and Jake came to us in financial stress and learnt how to save 30k in 2 years and how to solve their credit card debt issues. So, how did they do it?

Aaron and Jake found themselves credit card holders of six credit cards and a mountain of debt. Creditors and collections agencies were hounding them and it felt like they were running in circles. Even catching up with friends was stressful because they had no spending money because it all went towards their various credit card accounts with minimum repayments.

Exhausted and with no solution in sight, they were on the verge of declaring bankruptcy. But in three years, they paid off three of their six credit cards and close to $30,000 of debt. And with no more credit card repayments to worry about, the couple are now excited about saving for a house and starting a family.

In Aaron and Jake’s case, they reached breaking point after seeing their credit score and doing a credit balance transfer. Before the promotion period of time ended, they failed to close the old cards, maxed out the credit limit again and doubled their debt.

Jake and Aaron are not alone. Research conducted by media company Mamamia found that 81% of Australians struggle to pay bills, and 78% find it hard to save. These findings correlate with the top reasons people state they seek the help of MyBudget:

  1. To remove stress
  2. Saving to travel
  3. Housing
  4. Paying off debt
  5. To build up savings and emergency money

Not even being able to pay the minimum payment is certainly a cause for concern. As of October 2022, the average credit card debt in Australia is $2,948. This staggering amount of average credit card debt helps to explain why credit card stress is a leading cause of financial stress, especially considering the astounding credit limits credit card providers may provide.

In Aaron and Jake’s case, they came to MyBudget seeking another set of eyes to look over their finances. They met with a free money expert who, using their knowledge and experience, was able to formulate an affordable approach that would relieve Aaron and Jake’s stress quickly and make sure they got back on their feet.

“When you’re in financial hardship, it’s often hard to see a way out,” says MyBudget founder Tammy Barton. “Whereas a debt expert knows your financial and legal rights, as well as which strategies work best in which situations. We deal with lenders and debt collectors every day, so we know what they need and how to work with them.”

Aaron says, “Having someone not judge us and make us feel embarrassed—they [MyBudget] were just very empathetic and assured us that something can be done”.

A couple sitting at a desk discussing Non-Confirming Loans

In Jake and Aaron’s case, they decided to “focus on one credit card at a time and have a few paid off by the end of each year”.

Now, instead of spending first and worrying (a lot!) about how to pay for it later, they have a workable budget based on their financial goals and living within their means – and best yet? This budget helped them to save 30k in two years. And with cost of living going up, having a plan can help to provide necessary control conditions.

Dealing with their debt has given Jake and Aaron a new perspective on money. Jake says, “For the first time, we’re planning holidays, and not even thinking about a credit card. We now see the value in saving.”

For Aaron, it’s the exhilarating feeling of having freedom to make choices. “Being debt-free allows spontaneity in our lives without feeling like we couldn’t afford it or shouldn’t do something,” he explains.

FURTHER READING: How Megan and Creagh paid off $60,000 of debt in 10 months

Tammy Barton’s tips for how to get rid of your credit card debt

Credit cards are a leading cause of financial difficulty and stress

If you can’t pay your card balance on your credit card statement in full every month, it suggests you’re living beyond your means. Create a budget to bring your consumer spending down and get your credit card paid off.

Balance transfer cards are only good if used correctly

Jake and Aaron discovered the hard way that credit card balance transfers sound like a good idea, but can land people in deeper debt. Read more about the dos and don’t of credit card balance transfers and other promotion periods of promotional interest rate card offers.

Once your budget is in place, automate as much as possible

‘Set and forget’ is one of the reasons MyBudget clients are so successful at achieving their financial goals. Structure + automation + human expertise keeps them on track.

Still not feeling confident about how to get rid of your credit card debt?

The majority of MyBudget clients pay off more than 90% of their unsecured debt in three years. We can help you deal with creditors, reduce debt of your outstanding balances on credit cards and build up savings by designing a flexible budget to suit your financial goals and lifestyle.

Ready to find out more? Call 1300 300 922 to book your free budget consultation or enquire online.

Ready to find out more? Call 1300 300 922 to book your free budget consultation or enquire online.

Ready to find out more?

Call 1300 300 922 or get started today

This article has been prepared for information purposes only, and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.