Welcome back, fellow parent

This week I’m covering one of our favorite topics (and most dreaded)…credit cards.

Have you ever felt this way?

I know I have. And we’re not alone.

A recent Bankrate survey found 49% of US credit cardholders carry debt month to month. This is up from 39% in 2021, with emergency expenses being the leading cause.

There were roughly 214 million adults holding credit cards in 2022, meaning 105 million of these adults are carrying a balance month-over-month.

Layer on the fact that the average credit card interest rate is roughly 24%, this begins to paint quite a scary picture.

If you’re carrying high interest credit card debt and don’t have the cash to pay off the balances, below are four excellent ways to start tackling this debt.

1. Balance Transfer Credit Cards

If you’re planning on paying off the balance within the next 12-18 months, consider a balance transfer credit card.

These cards typically offer a 0% introductory rate and accept balance transfers from other cards.

One word of advice - make sure to pay off the balance before the introductory rate ends, or you may be in a worse position than before. I’ve seen rates go as high as 30%. 🤯

2. Personal Loans

For whatever reason, personal loans used to get a bad rap. But in reality, they’re a really great option when trying to get out of debt.

Here’s why:

First, they offer much lower interest rates. Nowadays I’m seeing rates come in around 12%, which is half of the average credit card rate.

Second, they are fixed loans, meaning you’ll have the same payment each month (like a mortgage). This allows you to better budget for the future.

Third, you can use a personal loan for just about anything (there are always exceptions). This means you can get one loan and use the funds to pay off multiple credit cards. This is usually called debt consolidation.

3. Debt Snowball Method

Once you’ve knocked down the interest rate, you’ll need to start paying off your debt. It’s the best way to achieve financial freedom.

The Debt Snowball Method is a debt payment approach which focuses on paying off your smallest debts first while making minimum payments on the rest.

This is a powerful debt payoff method and highly popularized over the past 20 years or so.

4. Debt Avalanche Method

Similar to the Debt Snowball Method, the Debt Avalanche Method is a debt payoff strategy.

The only difference is the Debt Avalanche method prioritizes debt with the highest interest rates first. This approach leads to a faster reduction in total interest paid.

I personally prefer the Debt Avalanche Method as you can save more money over the long term, but pick whichever works best for you and roll with it.

Money News 🤑

1. Reddit IPO: Reddit finally went public! This highly anticipated IPO saw shares jump 48% in the first day. It’s down ~10% since. Analysts have been quiet on ratings except for Loop Capital, which believes there’s a 30% upside.

2. DELL’s Remote Work Policy Update: A bit frustrating to say the least, but Dell has drawn a line in the sand against remote work. Sure, you’re welcome to work remotely. But in order to switch jobs or get a promotion, you need to work out of an office.

3. Social Security COLA: It’s going up again in 2025, but with inflation leveling off, it may only be around a 1.75% increase.

Ready to Tackle Your Budget?

If you’re looking to create a budget this year and either don’t trust finance apps or keep losing your notepad, check out the budget spreadsheet I created.

It only takes a few minutes each month to fill out and it provides great visuals for where your money is going.

It’ll cost you more to eat out for dinner tonight.

Thank You for Reading

Thanks again for reading. I’m grateful to be part of your financial journey.

Talk soon,

The Dollar Dad

P.S. If you liked this newsletter, please share it with your friends and family here. Reach out anytime with your top money questions, we’d love to help.