With COVID-19 still looming across the world, it stands to reason that many rely on credit cards to pay their bills. But as businesses continue to recover, people can begin to find a path back to their livelihood or look for new income opportunities. Unfortunately, that doesn’t mean the debt disappears. In fact, acquiring too much debt can take you years or decades to climb out of by yourself.
Making the minimum payment won’t put a dent against the interest growing your bottom line, and you might find it impossible to get ahead. Although you may have to rely on credit cards to bridge the gap between your income and expenses, you need an exit strategy once you reach the other side of this crisis.
The Real Cost of Debt
You might look at your debt and minimum payments, work them into your budget, and decide that you can handle the extra expense. But fitting your credit card payment into your budget is the least of your concerns because the real cost of debt is the halt of your wealth.
To build a sustainable amount of wealth, you have to remove debt from your finances because it’s not only costing you the money you spent, but it also costs you accumulated interest. Therefore, you’re paying more in the long run for every single charge. The longer you hold onto that debt, the more you pay, and since it’s hard to catch that running horse, the debt will continue to be a drag on your bottom line.
In addition to the financial strain on your budget, remaining in debt can have an adverse effect on your mental and physical health. Chronic stress can lead to a host of medical issues that you don’t need.
So, what are some ways to avoid these lasting effects on your financial, physical, and mental health?
Getting Your Debt Under Control
If you have more than one credit card, you likely have different interest rates and payment amounts, all putting a strain on your finances and trapping you in debt. The best thing to do in that case is to consolidate your debt under one umbrella.
For example, Georgetown Funding takes your eligible debt and gives you one payment and one interest rate. That way, you can chip away at your debt, free up money you’re spending to cover multiple minimum payments and get on the path to financial freedom.
Staying Out of Debt
Once you get help climbing out of debt, you want to stay out of debt because if you continue to use credit cards, you’ll end up right where you started, and all that hard work will be for nothing. The best way to stay out of debt is to make a family budget that you examine and adjust every few months to make sure it’s still helping you achieve your goals.
Structure your budget so that you live under your means. In other words, be sure that your expenses are less than your income by either decreasing your expenses, increasing your income, or both. As your amount of free money increases, be sure to use that cash to build your wealth and not use it to incur more expenses.
The point is, you don’t want to live up to your means because if you do, there is no room for growth, and you continue to live paycheck to paycheck. Living this way puts your one or two cycles away from jumping back onto credit cards to survive and starting the debt trap all over again.
Consolidation Is the Path to Freedom
If you’ve had to rely on credit cards in this uncertain time or if you already had debt going into 2020, there is a way out. Let Georgetown Funding help you consolidate your outstanding debt so you can have the peace of mind to devise a plan to stay debt-free.