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How to get rid of your credit card debt

Wondering how to tackle credit card debt? 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? If you’re wanting to know how to get rid of your credit card debt, then keep reading!

Aaron and Jake found themselves with 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.

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. The couple are now excited about saving for a house and starting a family.

How to tackle credit card debt

1. 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 getting worse. If you’re looking to know how to get rid of your credit card debt, then the first step is to acknowledge the problem.

In Aaron and Jake’s case, they reached breaking point after doing a credit balance transfer. Before the promotional interest rate period ended, they failed to close the old cards, maxed them out 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:

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

2. Expert debt help can save you thousands

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

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”.

Set achievable financial goals

If you’re trying to find out how to get rid of your credit card 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.

When people come to MyBudget for a free consultation, 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.”

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”.

Work out your needs from your wants

Aaron says that one of the keys to getting on top of their debt – and how they were able to save 30k in two years – was to understand the difference between needs and wants and then keeping each other accountable to their budget. “If we couldn’t afford it at the time, we would go without,” Aaron explains.

In the process, Jake and Aaron have found that budgeting gives them visibility to see where their money is actually going. And like a lot of people, they were surprised to see how their “little” expenses added up to thousands of dollars a 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.

Look forward to a debt-free future

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.

When money management is done right, it produces the feeling of freedom that Aaron and Jake are describing. They have a structured budget, plus automation of their bills and payments, plus 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, 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.”

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

  • Credit cards are a leading cause of financial hardship and stress. If you can’t pay your card balance in full every month, it suggests you’re living beyond your means. Create a budget to bring your spending down and get your credit card paid off.
  • 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 promotional interest rate 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 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 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.

All customised budgets and consultations with money experts are subject to MyBudget’s qualification criteria. We recommend that you read and consider our Product Disclosure Statement.

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