If you have maxed out on your credit card and are reeling under a sizeable debt, the last thing you want to do is to panic. By planning carefully and through some smart investing, you can get rid of your debt quickly.
Prioritize your debts
The interest rate charged on credit cards varies significantly, so pay off as many minimum payments on your card as possible, and focus on minimizing the balance of the card with the highest rates. Negotiate with your creditor and try to transfer your debt to a credit card that charges a lower interest rate. But don’t forget that there could be a fee for transferring your balance from one card to another.
Lower your expenses
You will have to consider sacrificing a few comforts and altering your lifestyle. Cutting back on your expenses is essential if you want to be debt-free. Make a note of all of your spending areas and see which ones you can eliminate. Even if there is an expense that you cannot eliminate, like grocery bills, you can at least try to minimize it.
If you spend lavishly on fine dining or eat out frequently, then it is time to rely on some good old home-made food to cut back on food expenses. You can save on costs of movie tickets by renting DVDs. Save on gas by carpooling or taking the subway. Buy discounted clothes – designer labels should be completely ruled out during this period.
If you are someone who spends a lot on books and magazines, then it is time to consider reading them in the library instead of buying them from stores. You can even consider cutting your cable subscription for some time.
Look for new sources of income
Consider new avenues to create wealth in a relatively short period of time. Borrow a small amount of money from family or from your savings and invest it in the stock market as a short-term investor. Smart trading will give you some good profits, which you can use to return the money you owe to family and also pay off credit card debt. But remember that stock market investments can be risky so make sure you do your research before you put your money in it. If you are not careful about your investments, you could even end up increasing your debt.