How can I efficiently pay of my credit card debts? I’m a fresh grad, 6 months into my first job, average pay. And I’ve already accumulated $3k worth of debts that I can’t pay. Should I cancel my credit card? ?

Question

Chen Qijian · Accepted Answer

Dude... if you have average pay then at least paying off those 3k should be easy.

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And its apparent you dont have control over your spending so... harsh words from me - Cancel those cards until you have a better grasp of yourself

Gabriel Tham · Answer

1. Reduce expenses if possible.

2. Direct more of your pay into repaying the debt.

3. If you cannot resist the credit card temptation, you can cancel it and get a debit card instead.

4. DO NOT borrow money to pay this debt. Borrowing more to pay another debt is just a vicious cycle.

5. If you really into trouble and need professional help to solve the debts, visit https://www.abs.org.sg/consumer-banking/consumers/debt-consolidation-plan

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I assume this debt is credit card debt, do your best to pay it all off asap. Because credit card debt incurs and compound interest extremely fast and can drown a person in even more debt.

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Yeap Ming Feng · Answer

Where is this $3K worth of debts from?

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I personally had credit cards when I first started working (just so I can enter Zouk for free). It wasn't long before I realised it is a huge mistake.

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This is mainly because:

1) Having just entered workforce, our salary will not be able to handle possible late payments

2) Having just entered the workforce, we tend to have a shopping spree mentality, purchasing things we cannot afford when we are schooling.

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These contributes to us spending recklessly. Cancelling all the credit card was the best thing that happened to me then. Of course, when you form a good habit of budgeting, get your preferred credit card for Cashbacks or Miles!

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Now, priority will be to clear those debts.

Here's are two methods to help you:

Snowball Method and Avalanche Method, both proven to work.

Read about it here: [https://blog.seedly.sg/hacks-to-clear-your-debts-fast-and-effectively/](https://blog.seedly.sg/hacks-to-clear-your-debts-fast-and-effectively/)

Isabella Jo · Answer

If you feel you don't have the discipline in using credit cards, I suggest to cancel it. Credit card debt has high interest rate. Possible to borrow from family to pay back before the amount snowball? You can work out repayment time line and start a fresh with lesser damage than slowly repaying your debt to the bank.

Yong Kah Hwee · Answer

1. Track your expenses. Have enough discipline to record your expenses, then try to cut down on unnecessary spendings.

2. I would suggest cancelling your credit card(s). Don't think you'll want to live the nightmare of trying to pay off the 20+% of credit card debts.

3. Have a plan. And stick to it!

HC Tang · Answer

1. Cancer the cc first. This will turn off the leak from your income.

2. Use Excel list down all your monthly spending , all cost and income. This will allow you to know where your $ goes to.

3. Reduce your other non mandatory expenses such as restaurant , reduce cigarettes cost if you smoke, skip grab and take all public transport. If you have no contract with Telco then switch to a no sim lower monthly subscription plan. Reduce daily food expenses.

4. Doing all the above will allow you to squeeze out at least $100 to $200. Use this to repay your 3k faster.

5. Do part-time job such as delivery for the food apps (foodpanda, honest bee etc) or any other part time. With the extra income , it can help reduce your 3k faster.

6. All in all doing the above will help repay your 3k debts within a year or even faster like 6 months , depends on how desperate you're willing to do to quickly repay the debts.

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All the best ! Debts free soon ! 😃👍

Gabriel · Answer

Do your budgeting, cancel your credit card, clear off your debts as soon as possible to reduce the interest and late payment fees payable

Jason Sing · Answer

Curb your spending habits. Undergo financial  counselling if you really have difficulty curbing your spending habits. Set a credit card limit of $1000 to limit your spending. You need not cancel your credit card if you could control your impulses. Think before you spend.

Jay Liu · Answer

Cancel your credit. Work part time jobs on weekends. Clear your debt ASAP. Never use a credit card again and just use a debit card.

Nicholas Chan · Answer

The moment u get your salary, take 50% of your salary & pay down your credit card 1st, then live on the rest. U can also look out for debt consolidation plans that have lower interest rates than credit cards' 24%pa.

Jonathan Chia Guangrong · Answer

You have to pay off the debt even if you cancel your card now. Find ways to reduce your expenditure, or find a way to increase your income and use this to pay down your debt ASAP. You won't want to be caught in a situation where you are barred from applying for credit cards in future. Talk to the bank and see if a plan can be worked out, then stick to it. Hope you can get out of this hole soon, and do learn from this lesson. You seem quite young, so don't let this issue carry on further into your adult life. Cheers

Thanh Dat · Answer

3k debts in credit cards, every month you will need to pay off your credit monthly financial charge. If you are spending more then you pay your bills..once your debt go up to $5k. You can be paying under $200 alone just on financial charge. NOW go take up a personal bank loan. Clear up your credit card bill. You can use your credit card to take up the personal loan. But be sure you cut down on using your credit card. And your personal loan you how long you want to repayments to the bank. 2 years..3 years EVERY MONTH. if you are paying the financial charge..why not take up personal loan to clear all. So it will become manageable for you. But if you keep up to use your credit card. Good luck to you

Alan Kor · Answer

wow 3k cannot pay?

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u need to stop ur lavish spending

Serene Toh · Answer

First off, read the budgeting articles in seedly, and set up your spending budget

- for now avoid using credit card (lock it at home) until you learn how to control your spending.
- make sure you are using the current account with the best interest rate (every penny counts here)
- set a target monthly amount to pay back the loan.
- consider how to get extra cash, e.g. sell off any unwanted items on carousell, give tuition, etc

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- most efficient way is to live an austere life for a short period to clear the debt, then you can start to relax...a bit. If you are getting $2000 - 2500, I would target to clear the debt within a year, extremely doable, less than 6 months if your really stingy on yourself, packed lunch, no cabs, etc.. (please do not plan for holiday, or sign up for any grooming / gym packages until after you pay back your debt) Chinese saying, chang tong  bu ru duan tong. Short term pain better than Long term pain
- basically clear your debt before you start seriously saving. The interest for the debt is way higher than what you are getting for your savings.
- and think on the bright side. If you can target $X per month for the debt, and get use to living this way. That's the extra savings you can get for retirement & investment after you clear your debt.

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This is a bad example, but if your parents are well off, can consider getting a loan off them for this credit card loan, but have to be discipline to pay them off monthly at a smaller interest then what the bank is charging. You need to agree with them the monthly amount and how long you'll take to pay them back (This is purely to lower the interest charge). Key Word, LOAN, INTEREST, PAY THEM BACK

Kenichi Xi · Answer

Short Answer 
Yes. Cancel your credit card and use a debit card instead if you are really into saving with spending when the debit card offers cash back.

Making money as you spend is better then paying more when you spend due to late payment or interest from credit card debt.

$3k is still a manageable sum so is better to clear it asap and work towards savings.

You need savings to propel toward your future and not just striking or rich.

Hope my reply helps.

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Thank you.