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Salam Aunt Maya. How can I get rid of my credit card debt? I have a debt of just over £10,000, it feels insurmountable, I feel crippled and I have so much anxiety around it, can you guide me how to manage my finances while paying this off? I am able to save around 200 every month for emergencies but that’s about it.

Maya Areem responds:

Asalamu alaykum,

Thank you for taking the time to write to us, and I pray Allah (SWT) brings ease into your life. Debt, no matter how small or big, can indeed feel overwhelming. You’re not alone in this experience; many current systems are designed in a way that leads to people being burdened with loans and recurring debt. Hopefully, with a strategic approach you can make steady progress towards being in a better financial place.

By choosing to take care of it and seeking guidance around it you are already solving the problem! Looking forward, solving this will include a list of to-dos and system changes, and it is important to understand and accept that this won’t happen overnight, but you will get there inshaAllah. 

It is great that you are still able to save despite being in debt, it is also worth thinking about the stats in your location to give you some perspective. For example here in the UK some stats say about 46% of people have £1000 or less in savings and 25% have £200 or less.

Take a close look at your credit card statements to understand the specifics of your debt. This will help you prioritise which debts to tackle first.

1. List Your Debts

Start by listing your debts. You cannot get control of a situation you don’t have clarity on. Create a table with the following details:

• Account Name
• Amount Owing
• Interest Rate
• Minimum Mandatory Payment
• Minimum Payment Due Date

2. Total Your Debts

Sum up all your debts to understand the full scope of what you owe.

There are many strategies to manage and reduce debt. Since you are able to save £200 every month, hopefully it will prevent you from using your credit cards for small emergencies that arise. Here are some common methods to start paying the debts down. Each situation is unique, so try different approaches to find what works best for you.

• Snowball Method: Pay off the smallest debt first while making minimum payments on the others. Once the smallest debt is paid, move on to the next smallest, and so on. This method can provide quick wins and motivation.
• Avalanche Method: Focus on paying off the debt with the highest interest rate first while making minimum payments on the others. This method saves money on interest in the long run.

You can also try to negotiate with your creditors. Contact your credit card company to negotiate lower interest rates or inquire about any hardship programs they may offer. Sometimes, explaining your situation can lead to temporary interest rate reductions or payment plans that make it easier to manage your debt.

You may also consider balance transfers or consolidation. If you have good credit, check if you are eligible for a balance transfer credit card with a low or 0% introductory APR (Annual Percentage Rate). APR represents the annual cost of borrowing money, including interest and fees, expressed as a percentage. This rate helps you compare the costs of different credit cards or loans on an annual basis. 

This can help you consolidate your debt and pay it off faster without accruing interest. Alternatively, a personal loan with a lower interest rate can consolidate your debts into one manageable payment.

The next step is to stay on track with your monthly budget by tracking your income and expenses, including all your fixed and variable costs. This can help identify any areas where you can save or make sacrifices. It sounds like you may have already done this and are left with £200 to save.

Allocate as much as you can towards paying off your debt while ensuring you still save for emergencies. You could consider putting aside £100 into savings and £100 towards debt repayments each month. This way, you’ll be saving and reducing your debt simultaneously until it’s fully paid off.

Tracking every purchase can be particularly helpful as it keeps spending visible and might replace the dopamine hit of buying with the satisfaction of seeing debt decrease. Try budget tracking apps like Emma, Plum or HyperJar for budgeting, as they can be effective tools.

I know it is difficult to hear the suggestion of increasing your income as many people in debt and financial difficulty are working as much as they can and are being failed. If it is feasible, you can perhaps look for opportunities to increase your income, even temporarily. Here are some ideas:

• Sell Unneeded Items: Use platforms like Facebook Marketplace to sell things you don’t need. This can help simplify your life and declutter your space.
• Utilise Your Skills: If you have a craft or a skill, consider selling your products or services.
• Extra Work: Take on some extra contract work if possible. 

If you still feel overwhelmed, organisations like StepChange or Citizens Advice in the UK offer free, confidential help and can assist you in creating a personalised plan to manage your debt.

It is important to remember that debt repayment is often a marathon, not a sprint. Celebrate small victories along the way and remind yourself of the ultimate goal: financial freedom. 

Continue saving some money monthly for emergencies. Having an emergency fund can prevent you from accruing additional debt if unexpected expenses arise.

Last but not the least, once you have a clear view of your finances, set reasonable limits so you don’t feel like you’re punishing yourself and unable to enjoy life. Often, just the act of tracking your spending can change the way you make day-to-day financial choices.

The journey to becoming debt-free requires time, effort, and patience. Approach solving this like growing a garden that you tend to every day with your systems, discipline, and nurturing back to health. Accept that you have to just trust that with time it will be done. It can’t be done immediately, but with patience, you can accomplish it. 

By following these steps, you can take control of your finances and gradually alleviate the anxiety that comes with debt. 

Wishing you all the best on your journey to financial freedom. May Allah SWT grant barakah in all your provisions and grant you a debt-free life. Ameen

Love + Duas,
Aunt Maya

If you would like some wisdom from Aunt Maya, send in your problems here! Please note Aunt Maya may consult the opinion of others from time to time and ask the Amaliah community for their advice too. Aunt Maya is not a licensed therapist or mental health professional.