Cut your credit card debt with small changes

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The news reports all say the same thing: Americans are drowning in trillions of dollars of credit card debt. You don’t have to be a statistic. With just a few lifestyle changes, you can reduce or eliminate the amount you owe.

Be clear on how you will use credit

Develop a plan on how you will use your credit cards: everyday purchases, emergencies, once in a while? Maybe you want to use your card for purchasing big-ticket items only. You decide. Then find a way to reduce your temptation to spend unnecessarily. For example, think of your credit card as a part of your budget. Know your limits and spend only what you can afford to repay in full every month.

Set a realistic deadline to pay off debt

To deal with credit card debt, start with a debt payoff deadline, so you’re focused on your end goal. For example, maybe your goal is to pay off at least half of your debt in one year and the remaining balance by the end of the next. Think about what it will take to reach that goal. Then create checkpoints and milestones so you can stay motivated to move on to the next level.

When it comes to repayment keep your payoff plan top of mind. Since you likely have a mobile device within arm’s reach, consider a digital money management service, like Compass, LGFCU’s complimentary money management service. You’ll want something that gathers information from all your financial accounts so you can view your transactions in one place. The goal here is to see where your money goes and maybe where it shouldn’t. Armed with information, you can create a budget that fits your needs.

Give your cards a rest

Put the cards away and try an all-cash diet for 30 days to help you control impulse spending. Refer back to your budget to see how much you spend in a given month in different categories. Based on that number, give yourself a fixed amount of cash every week to pay for nonessential purchases. Just be sure to track those cash purchases in your app, as it’s easy to lose sight of what you’ve been spending.

Other ways to manage and reduce your debt

Adding more to your minimum payment helps pay off credit card balances faster. Another way to reduce your debt is to consolidate your outstanding card balances at a lower interest rate. LGFCU’s low rate Visa® Credit Card may be a reasonable option. Not only will you pay less in total interest if you get a lower-rate card, you may cut the time it takes to pay off the debt.

Don’t fall back into old spending habits once the high-interest debt has been transferred. Close all but the oldest credit card account. That’s because you have the longest credit history with that issuer and you want your credit report to reflect that. Then put that card out of reach! Focus on your payoff plan to help keep you on the road to being debt-free.

Celebrate a job well done

Take time to review your credit card debt load occasionally and see what progress you’ve made. Reward yourself for lowering your balance with a no-cost or inexpensive treat. Just continue to stay focused on the small but important lifestyle changes you’ve made and keep the momentum going. For more ways to cut your debt, contact your nearest branch to receive no-cost Financial Counseling.

The advice provided is for informational purposes only. Contact a financial advisor for additional guidance.

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