A lot of American consumers think that credit card debt is credit card debt. They don’t really see much difference between the different types of debt that they have. This really is too bad because not all credit cards are the same so the debts that you create with them are not the same.
For debt consolidation, you should start with low-hanging fruit. If you have a credit card that charges a high rate of interest, it’s a good idea to pay off that card first. Why? For every month that you let that card drag on, it’s going to weigh down on your bottom line. It’s going to sap your financial resources.
It’s a much better use of your time to devote all your financial firepower to knocking out higher interest credit card debt first, and then proceeding to lower interest debt.
The second prioritization step you should take is to reduce your expenses across the board. The more you reduce your expenses, the more money you have left at the end of the month. You use this cash to knock down the higher interest rate debt. Once that’s gone, you then take this cash and knock down medium interest rate debt. You keep repeating this process until you knock down all your debt.
The secret here is to continue to keep a downward pressure on your expenses on a month-to-month basis. This is crucial because if your spending goes back up, then you won’t have the financial resources you need to pay up your credit card obligations sooner rather than later.
Both factors have to work together. You have to work on reducing the interest that you pay on your cards by using creative balance transfer schemes and zero interest rate credit cards. At the same time, you should also look at creative ways of reducing your expenses. If you pursue these objectives together, you would go a long way in completely eliminating your debt.
Again, it all boils down to planning. Your planning must be cogent, cohesive, and systematic. Otherwise, it’s too easy to do things by the seat of your pants and end up failing.
Everyone can relate to the pressured feeling people get when they are faced with financial burdens at the end of every month. Anyone who has struggled to borrow money just to cover rent or mortgage payments at the end of every month knows all about this. Everyone can see that this pressured and hassled feeling is not a good thing.
With that said, most Americans would prefer to kick the can down the road. Don’t get me wrong. They manage to handle issues when those financial issues come up at the end of the month. But once the financial challenges die down temporarily, their attention fades or shifts to something else. Not surprisingly, they end up feeling pressured at the end of the month again and again. It gets old but people won’t seem to learn.
If you are frustrated about end of the month financial issues, you need to feel the emotional burn of having to rack your brains at the end of the month. Focus on this unpleasant financial ritual and allow yourself to be truly ticked off.
Feel the emotional burn of having to hassle with your finances again and again. Once you feel fully emotionally engaged, this should be enough to get you off the fence and finally start planning to get out from under all your financial hassles.
The key is to be so upset and be so worked up that you are able to override your tendency to yet again kick the can down the road.