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How to Pay Down Your Credit Card Faster Even If You Don’t Have Extra Money

March 5, 2020 By MelissaB 2 Comments

Your budget is tight.  I get that.  You stare at your long list of debts and don’t know where to begin.  You may wonder how to pay down your credit card faster even if you don’t have extra money.  After all, you may be doing all you can just to meet your basic monthly obligations.

How to Pay Down Your Credit Card Faster Even If You Don't Have Extra Money

If you search the Internet for help, you’ll likely find suggestions like eliminating eating out, visiting coffee shops, and buying designer clothes.  But what if you’ve already eliminated all of those extras, plus cable television, date nights out, and entertainment with the family?  What if you buy used clothes, have your grocery budget as low as it can be, and have changed to VOIP phone service?  Perhaps you’ve cut as much as you can.  What if you have nothing left to cut?

You may feel like you’re in a desperate position, but there are still strategies to pay down your credit card faster even if you don’t have extra money.

Stop Using the Credit Cards

Before you begin to employ any pay down strategies, the most important thing you can do is stop using the credit cards!  There’s no way to pay down the balance if you keep using the card.  Let’s be honest, if you stop using the card completely, eventually it WILL be paid off even if you don’t use any strategies to pay down your credit card faster, even if you don’t have extra money.

However, if you stop using the card and use the following techniques, you will slowly but surely pay off your credit card.  And, you will do it faster than if you just stopped using the card and paid the minimum payment every month.  (Sure, that’s better than using the card and having a perpetual balance, but just paying the minimum will take you sometimes 20+ years to pay off the card.)  Instead, use a two fold approach:  stop using the cards and use these strategies:

How to Pay Down Your Credit Card Faster Even If You Don't Have Extra Money
Photo by Nathan Dumlao on Unsplash

How to Pay Down Your Credit Card Faster Even If You Don’t Have Extra Money

Use these techniques to “create” extra money to put on your credit card, which will slowly but surely help you lower those balances.

Switch to a 0% APR Credit Card

If your credit is good enough, you may want to try applying for a 0% APR card.  These cards often give you a 0% APR for 12 to 15 months.  Since you’re not paying interest during that time, you can pay off your credit cards more quickly than if you were still paying interest.

If you owe $10,000 on a credit card, and you have an APR of 16.99%, each year, you’re paying approximately $1,699 in interest on the card or approximately $141 a month in interest.  Now, imagine having a 0% APR for a year.  That means if you make your exact same payment as before switching to a 0% APR credit card, you’re paying an additional $141 a month on the card instead of interest.  By taking advantage of a 0% APR credit card, you can reduce your balance by an additional $1,699 in a year!

Many of these cards charge a 2 to 4% transfer fee, so do the math first and make sure you will save money over your current card charging interest.  If the math works in your favor, consider continuing to use this strategy.  When the 12-month promotional 0% APR ends, switch your remaining balance to another 0% APR card until you have the card paid off.

Negotiate a Lower Interest Rate

If you don’t have access to a 0% APR credit card, try to call your credit card company to negotiate a lower interest rate.  I’ve had good luck with this strategy.  Just recently, I called one of my credit card companies and asked for an interest rate drop.  They moved me from 13.99% APR to 10.99% APR.

Let’s say again that you have a $10,000 balance.  If you’re paying 13.99% APR as I was, then you’re paying approximately $1,399 a year in interest.  Just this simple rate reduction to 10.99% APR means you’ll be paying approximately $1,099 in interest per year, saving you $300 a year in interest.  That entire $300 can be used to reduce your overall balance, assuming you continue to make the same payment throughout the year.  This difference in interest rate means you have more money you can apply to the balance without increasing your monthly payment.

Pay Weekly or Bi-monthly

Most people pay their credit card monthly.  If you instead pay weekly or every two weeks, you’ll pay down your balance faster without increasing your payment.

Why?  Two very important reasons.

First, your interest rate is computed based on your daily average, and if you pay more frequently, you’ll lower your daily average.  If you normally pay $100 a month, just pay $25 a week instead or $50 every two weeks.

Second, if you pay weekly or biweekly, you’re actually paying more than if you pay monthly.  If you pay $100 a month, you’re paying $1,200 over the course of a year.  If, however, you instead pay $25 a week, you’re actually paying more–$1,300 a year.  Sure, it’s only $100 more on principal over the course of a year, but in time, that additional principal payment will make a difference in how quickly you’re able to pay down the card.

Don’t Lower Your Payment as Your Minimum Payment Drops

If you’re currently paying your required minimum payment of, say, $100 a month, in a few months, that minimum payment will drop to, say, $97.  Don’t drop your own payment.  Keep paying the $100 you’re used to paying.  That extra will be put on principle without affecting your current budget.

Drum Up Some Extra Money

Finally, you can consider making extra money and snowflaking your debt off – such as making micropayments $1, $3 or $7 towards your debts. Good ways to make extra money are to take surveys, sell your space internet bandwidth, get a second job or start flipping things like comic books or furniture on ebay.

Final Thoughts

If you’re looking at your bills and desperately wondering how to pay down your credit cards faster even if you don’t have extra money, remember, there are strategies to help you pay off the cards faster.  Just using these simple steps will help you pay more on principal without putting extra money on the debt.  Of course, as you make additional money, you’ll want to put it on the debt, but until then, you can gain traction with these strategies.

What other tips do you have for people to pay off their credit cards faster even if they don’t have extra money to throw at the debt?

Read More:

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MelissaB
MelissaB

Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.

www.momsplans.com/

Filed Under: Debt Reduction Tagged With: credit cards, debt

Why It’s Okay to Make Financial Mistakes

February 24, 2020 By MelissaB 1 Comment

What’s the worst financial mistake you’ve made?  Ask any adult, and you’ll likely hear about thousand dollar or even hundreds of thousands of dollar mistakes.  Ouch.  We’d all love to go through life with a great handle on our money, only making smart decisions and watching our money grow in investment accounts.  But life isn’t that way.  Sometimes we’re just stupid with money, and other times, we think we’re making a smart decision only to find out later that we were wrong.  But that’s okay.  In fact, there are many reasons why it’s okay to make financial mistakes.

Why It's Okay to Make Financial Mistakes

Why It’s Okay to Make Financial Mistakes

Chances are you’re more financially savvy because of the mistakes you’ve made!

You Learn

The most important reason why it’s okay to make financial mistakes is that you learn from those mistakes.

When I was in my early 20s and just out of college, I was working at a job and was told that I would be getting a raise in the next few weeks.  I increased my meager standard of living because I knew the raise was in the works.  But week after week went by, and I didn’t get the raise.  In fact, a few months later, the company went out of business.  Not only was I out of a job, but I had accrued some debt by raising my lifestyle prematurely.

A few years ago, my husband was guaranteed a raise.  It was supposed to come in August, but it didn’t actually come until December.  Thanks to the lesson I learned in my 20s, we were very careful to avoid lifestyle creep.

You Can Help Others

When you’ve learned from your financial mistakes, you can help others avoid the same mistakes that you made.

Why It's Okay to Make Financial Mistakes
Photo by Irina Murza on Unsplash

When I went to graduate school, I did my best to avoid student loans.  I chose a college that paid my tuition and gave me a small stipend for teaching two classes a semester.  But after I graduated, I wanted to teach at a community college.  Those full-time jobs are inaccessible if you don’t have experience.  The only way to get experience is to teach as a part-timer, and part-time community college jobs pay next to nothing (about $1,000 for a 16 week class).

I went into credit card debt trying to maintain my college lifestyle (which was already frugal) while earning poverty level income.  The next year, I did get a full-time community college job, but I entered that job with over ten thousand dollars in credit card debt thanks to trying to subsist on such a low income.

When it comes to encouraging my kids to save and plan for college, I urge them to try to get scholarships that will also help them pay their living expenses.  We’re sending my son to SAT prep classes so he can score high enough to be in the running for a lucrative scholarship from our local college.

Final Thoughts

Making money mistakes is part of your history.  Hopefully, you’ve grown and made smarter decisions because of your financial mistakes, which is an excellent reason why it’s okay to make financial mistakes.

However, if you find yourself making the same mistakes over and over again, i.e. running up your credit cards, paying them down, and then running them up again, you may need to explore more deeply why you keep following the same negative behavior patterns.

MelissaB
MelissaB

Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.

www.momsplans.com/

Filed Under: credit cards, Financial Mistakes, General Finance Tagged With: credit cards, money mistakes, Student Loans

Taking your Side Hustle Mobile

December 30, 2017 By Shane Ede Leave a Comment

This post has been brought to you by: SumUp (opinions are still mine though!)

If you’re like me (and you likely are if you’re reading this post), you’ve always got a side hustle or two running at once. You’re always looking for something to augment your income and help you pay off debt (or pay for that extra vacation). This blog is one of mine. I’ve also got a few things that I’ve got posted on my Etsy store. Nearly everything that I do is online. I don’t have to carry inventory, or attend swap meets, or anything of the like. But that’s not the case for all of you.

SumUp EMV card reader
photo credit: SumUp

For some of you, there’s a very good chance that you’ve got to be mobile, and you’ve got to accept payments wherever your customer meets you. In the past, that has meant carrying a bit of cash around to make change with, and when the day has been good, carrying even more cash back with you.  That can be dangerous.  The other issue you will likely run into is that you’re likely to have a few customers like me who rarely carry more than a few dollars of cash, and want to pay for their purchase with their debit or credit card.

If you are one of those who makes sales while on the go, you need some way to process credit or debit transactions.  Not only is it safer than carrying around a bunch of cash, but it will save you a heck of a lot of time and energy when doing your accounting at the end of the day. There are plenty of companies that offer these kinds of services.  One that offers up both a super portable card reader and a portable cash register, is a company called SumUp. Unlike some of their competitors, their device connects to an app on your phone (iOS or Android) via bluetooth, getting rid of the dongle approach that can easily break. And there’s a couple of ways that you can accept cards through the device.

Magstripe transactions

This is the old fashioned way of taking a credit transaction. The magnetic strip on the back of the cards holds all the card data.  A quick swipe, and the reader reads that data, and processes the transaction.  Easy peasy. Most of us are super used to transactions that work this way.

EMV chip transactions

Magstripe is the tried and true transaction process. But it’s also the one that makes it super easy for fraudsters to copy the data from the stripe and use it to perform fraudulent transactions. The EMV chip is the new technology that is meant to help prevent all of that. The chip is embedded in the new cards, and needs to be inserted into the reader. It has to be physically present to work, and it’s not as easily copied. It’s more secure, and it works well.

SumUp’s fees and limits match or best their competition, and their design is pretty cool too. Watch this video to see what it’s all about.

At the end of the day, if you’ve got a side hustle that has to be mobile, you need some sort of mobile card terminal. There are several options out there, and SumUp is just one of those. As the hustler, I would expect you to do your due diligence and make a decision based on what your business needs are. The only thing I can really tell you is that if you don’t have a way to process these sorts of transactions, you’re leaving money on the proverbial table. Don’t do that.

Shane Ede

I started this blog to share what I know and what I was learning about personal finance. Along the way I’ve met and found many blogging friends. Please feel free to connect with me on the Beating Broke accounts: Twitter and Facebook.

You can also connect with me personally at Novelnaut, Thatedeguy, Shane Ede, and my personal Twitter.

www.beatingbroke.com

Filed Under: Business Finance, credit cards Tagged With: business, credit cards, mobile app, side hustle

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