Shopping runs in our Malaysian veins. We are love a bargain and can hunt down a sale in a blink of an eye. With the emergence of online shopping, there is no longer a need to spend hours finding a parking space in a crowded mall to find a bargain. It all can be done in the comfort of your home without even have to get out of bed. One click shopping or Paypal help you quickly seal the deal and before you know it, you’ve got a ‘surprise’ bill at the end of the month, and you think, “Oh no, I’ve done it again?!”
To be financially free and create stability, start now by following these 9 tips on how to get rid of credit card debt before it becomes too much to bear.
1. Know which card has the highest interest
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Credit cards come with some of the highest interest rates in banking as it is an unsecured loan. Go through the pile of credit cards you have and organize them according to highest to lowest interest. Start putting extra money into the Card 1 with the highest interest while also paying the minimum for the rest of the cards. The aim is to pay off Card 1 and once that is done, the aim is to pay off Card 2 which has the second highest interest. But don’t get too happy when paying off the card, cut up Card 1 and then compound payment of minimum plus extra + minimum from Card 1. Just do it!
2. Know Your Spending
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Take the time to go through the last 2 months of credit card statements to see where you are overspending on. Just pick 1 – 2 things that you think you can easily cut out to use as extra payment towards paying off the credit card debt. Did you know that your daily Starbucks French Vanilla Latte costs you RM676 a year? It’s called the ‘Latte Factor’ by David Bach, a recommended read if you want to live rich!
3. Have a ‘No Spend’ Month
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While it might sound super scary and intimidating having to not spend at all for the whole month, this actually just means no going out to eat and no buying new stuff. Keep to your grocery budget and the month will just fly by. And if you urgently need something, the loophole is that you can either loan it from someone or buy it second hand. With excellent pre-loved sites like Mudah.my, it will be a breeze to stay within the constrains.
4. Sell Your Stuff
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While you are at it saving and not spending, why not pay off the credit card easier by earning some extra money to put into against the credit card debt payment. Sell the stuff you no longer use at second hand online stores like Mudah.my and put all earnings into paying off those credit cards. I mean your junk could be someone else’s treasure! This is also good therapy, the time you’re not out spending money is the time you use for de-cluttering your home, and you get the satisfaction that you’re in control when you have a clean house and some extra cash. Just be sure to use it to pay your debt, not buy more stuff!
5. Public transport/Car pool
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If you work in a big office, chances are there is at least one person who lives near you. Scout out your driving victim and convince them to try out carpooling for one month. If it all goes well, just know a habit is formed in 30 days so you might have the perfect saving tip all sorted. If not, keep the car at home for say 3 days a week and take public transport to save petrol. But if you pay a premium for parking anyway, there’s no point!
6. Have a ‘Dry’ Month
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Cut out alcohol and coffee for just one month and gain the extra benefit of losing weight too. Just think the next time you have coffee or alcohol again, you will have the added first time again buzz. And there’s apparently a certain clarity and energy you feel once you go on an alcohol or coffee ban after a week or two, try it!
7. Free Group Activities
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Look out for any free activities to participate in with your friends and family. While paid entertainment might be great, be a minimalist and cut down on screen time by being in the moment enjoying a stroll in the park or manicure at home. Your weekly movie tickets for a family of 4 can cost up to RM567.60 a month.
8. Dump savings into CC payment
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All Malaysians have and know the true meaning of savings. We all had our little ‘tabung’ full of coins that we deposit into the bank once a year. How about getting ahead of the credit card debt by dumping a chunk of your savings into paying some of it off. No more than 50% of your savings though because you will need ‘just-in-case’ money.
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The main thing is: Enough procrastination, just do it. Start today by cutting down on one thing or making a budget to stick to.
Money might not be the root of all evil if we just use it wisely. Don’t play-play!