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Earn a high-yield savings rate with JG Wentworth Debt Relief
Balancing the High Cost of Living with Credit Card Debt
by
JG Wentworth
•
November 20, 2025
•
14 min
This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
The financial squeeze many households face today feels increasingly urgent. As everyday expenses climb—from groceries and gas to rent and utilities—credit cards have become a common lifeline for bridging the gap between income and expenses. Yet relying on credit cards to manage rising costs creates its own dangerous cycle: the debt accumulates, interest charges multiply, and the monthly payments themselves become another expense that’s difficult to afford.
Breaking free from this pattern requires a strategic approach that addresses both sides of the equation simultaneously. You need to reduce expenses where possible, maximize income, and tackle debt systematically—all while keeping your basic needs covered. This article provides a comprehensive framework for navigating this challenging financial landscape.
Understanding the true cost of carrying credit card debt
Before developing a strategy, it’s crucial to understand exactly what credit card debt costs you.
- Unlike mortgages or student loans with relatively low interest rates, credit cards typically charge much higher rates that can range anywhere from 15% to over 30% annually. This means that a $5,000 balance at 20% interest will cost you about $1,000 per year in interest alone if you only make minimum payments.
- The minimum payment trap is particularly insidious. Credit card companies typically set minimum payments at around 2-3% of your balance, which barely covers the interest charges. If you only pay the minimum on that $5,000 balance, it could take you over 20 years to pay off and cost you thousands in interest—assuming you never add another dollar to the balance.
Understanding these numbers isn’t meant to discourage you, but to clarify what you’re up against. This knowledge helps you prioritize debt repayment appropriately and motivates you to find extra dollars to put toward your balance whenever possible.
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Creating a realistic budget that accounts for both needs and debt
The foundation of any financial recovery plan is a clear-eyed budget. Many people skip this step because they fear what they’ll find, but you cannot manage what you don’t measure.
- Start by tracking every dollar you spend for at least one month. Use a budgeting app, a spreadsheet, or even a notebook—the tool matters less than the consistency. Categorize your spending into essential expenses (housing, utilities, food, transportation, minimum debt payments, insurance) and discretionary spending (entertainment, dining out, subscriptions, shopping).
- Once you see where your money goes, you can make informed decisions. Look for expenses that provide minimal value relative to their cost. This might be subscription services you rarely use, premium cable packages, or daily convenience purchases that add up significantly over time.
- However, be realistic about what you can sustain. A budget that eliminates all joy from your life will fail within weeks. Instead, identify which discretionary expenses matter most to your wellbeing and quality of life, and reduce or eliminate the rest. Perhaps you deeply value your gym membership for mental health but could easily skip daily coffee shop visits. Honor what truly serves you while cutting what doesn’t.
- Your budget should also include your debt payments as a non-negotiable priority, ideally above the minimum payment. Even an extra $25 or $50 per month toward your highest-interest debt can dramatically reduce the time and money it takes to become debt-free.
Prioritizing your debts strategically
When you’re juggling multiple credit cards or other debts, you need a systematic approach to paying them down. Two popular methods work well, depending on your personality and situation.
- The avalanche method focuses on mathematical efficiency. You make minimum payments on all debts, then put any extra money toward the debt with the highest interest rate. Once that’s paid off, you roll that payment into the debt with the next highest rate. This approach saves you the most money in interest charges over time.
- The snowball method prioritizes psychological momentum. You pay off your smallest balance first, regardless of interest rate, then move to the next smallest. The quick wins of eliminating entire debts can provide the motivation needed to stick with your plan, even if it costs slightly more in interest over time.
Choose the method that resonates with you. The best debt repayment plan is the one you’ll actually follow consistently. Some people also use a hybrid approach, paying off one small debt quickly for motivation, then switching to the avalanche method for the larger balances.
Whatever method you choose, always make at least the minimum payment on every debt, every month. Missing payments damages your credit score, triggers late fees, and may cause your interest rates to increase—making your situation worse.
Negotiating with creditors to reduce your burden
Many people don’t realize that credit card debt is often negotiable, especially if you’re struggling to make payments. Credit card companies generally prefer to receive some payment rather than nothing, which gives you leverage to negotiate.
- If you’re current on your payments but struggling with high interest rates, call your credit card company and request a lower rate. Be polite but direct: explain that you’re a loyal customer working to pay down your balance, and ask if they can reduce your APR. If the first representative says no, politely ask to speak with a supervisor. Persistence often pays off, and even a reduction of a few percentage points can save you hundreds of dollars.
- If you’ve already missed payments or know you’re about to, contact your creditors immediately. Many companies offer hardship programs that can temporarily reduce your interest rate, lower your minimum payment, or pause late fees. These programs vary by lender, but they’re often available to customers who proactively reach out before their account becomes seriously delinquent.
- For those with significant debt across multiple cards, a balance transfer to a card offering 0% interest for an introductory period might make sense. This allows you to pause interest accumulation while you aggressively pay down the principal. However, watch for balance transfer fees (typically 3-5% of the amount transferred) and have a solid plan to pay off the balance before the promotional period ends, or you’ll be back to paying high interest rates.
Finding additional income to accelerate debt payoff
While cutting expenses helps, there’s a limit to how much you can reduce your spending. Increasing your income, even temporarily, can dramatically accelerate your debt repayment and provide breathing room in your budget.
- Consider your current job first. When was your last raise? If it’s been over a year and you’ve been performing well, schedule a conversation with your manager about a salary increase. Research typical salaries for your position and location, document your achievements, and make a clear case for why you deserve higher compensation.
- Outside your primary job, look for ways to monetize skills or assets you already have. This might include freelancing in your professional field, tutoring subjects you know well, or offering services like pet sitting, house cleaning, or handyman work. The gig economy offers numerous platforms for finding short-term work on your own schedule.
- You might also have items of value you no longer need or use. Selling furniture, electronics, clothing, or other possessions can generate a quick infusion of cash to put toward debt. While you shouldn’t sell things you’ll need to replace later, most households have accumulated items that provide no current value.
Any additional income—from a side job, a tax refund, a work bonus, or monetary gifts—should be directed primarily toward debt repayment during this recovery period. The faster you eliminate high-interest debt, the sooner you’ll have that money available for saving and other financial goals.
Protecting yourself from emergency expense shocks
One of the greatest challenges when you’re managing debt and tight finances is that unexpected expenses can derail your progress. A car repair, medical bill, or home maintenance issue can force you back onto credit cards, undoing months of progress.
This creates a paradox: conventional wisdom says to build an emergency fund before aggressively paying down debt, but the high interest on credit cards makes that debt extremely expensive to carry. The solution is to do both simultaneously, but in a modified way.
- While you’re paying down high-interest debt, aim to accumulate a small starter emergency fund of $500 to $1,000. This won’t cover every possible emergency, but it will handle many common unexpected expenses without forcing you back onto credit cards. Keep this money in a separate savings account that you don’t touch except for genuine emergencies.
- To build this fund, you might temporarily split any extra money you find between debt repayment and emergency savings. Once you have your starter fund in place, redirect everything extra toward debt until the high-interest balances are gone. Then you can aggressively build your emergency fund to the commonly recommended three to six months of expenses.
- Additionally, look for ways to reduce the likelihood of expensive emergencies. Stay current on preventive maintenance for your car and home. Take care of your health to avoid preventable medical costs. These investments in prevention often cost far less than dealing with emergencies after they occur.
Considering debt consolidation carefully
Debt consolidation—combining multiple debts into a single loan—can sometimes make sense, but it’s not a magic solution and carries risks.
- A personal loan from a bank or credit union might offer a lower interest rate than your credit cards, especially if you have decent credit. Consolidating multiple high-interest credit card balances into one lower-interest personal loan can reduce your monthly payment and the total interest you’ll pay. You’ll also have the psychological benefit of making just one payment instead of juggling several.
- However, debt consolidation only works if you change the behaviors that led to the debt in the first place. Too many people consolidate their credit cards, feel relief at having the cards paid off, and then run up new balances—leaving them with both the consolidation loan and new credit card debt.
Before consolidating, honestly assess whether you’ve addressed the underlying spending patterns. If you consolidate without fixing the root cause, you’ll likely end up in worse financial shape than before.
Adjusting your lifestyle without sacrificing what matters
Successfully navigating financial stress over the long term requires finding sustainable ways to reduce your cost of living without making yourself miserable. Deprivation that breeds resentment won’t last.
- Start by distinguishing between cost-cutting measures that feel like sacrifices and those that are simply different choices. Cooking at home instead of eating out might initially feel like a sacrifice, but if you approach it as an opportunity to develop new skills or spend quality time with family, it transforms into something positive. Similarly, choosing free entertainment like hiking or visiting museums on free days isn’t settling for less—it’s finding value that doesn’t require spending.
- Look for substitutions rather than eliminations. Instead of cutting out entertainment entirely, explore free community events, borrow books and movies from the library, or host game nights with friends instead of going to bars. Rather than abandoning social activities, suggest less expensive alternatives like potlucks instead of restaurants.
- Consider lifestyle changes that reduce multiple expenses Moving to a less expensive home or apartment can significantly reduce your largest expense category. Living in a location with good public transportation might allow you to eliminate a car payment, insurance, and maintenance costs. Working remotely, even part-time, can reduce commuting costs and potentially allow you to live in a more affordable area.
The goal is to align your spending with your values. When you spend money on things that genuinely matter to you and cut expenses on things that don’t, the reduced spending feels less like deprivation and more like living intentionally.
Protecting your credit while managing debt
Your credit score affects your ability to access affordable credit in the future, so protecting it even while struggling with debt is important for your long-term financial health.
- Payment history is the single most important factor in your credit score. Even when money is tight, prioritize making at least the minimum payment on all debts by the due date every month. If you must choose which bills to pay, credit card minimum payments should generally come before discretionary expenses, though obviously shelter, utilities, and food take priority over everything.
- Credit utilization—how much of your available credit you’re using—also significantly impacts your score. Ideally, you want to keep your balance below 30% of your credit limit on each card, though lower is better. As you pay down your balances, your score will likely improve even before the debt is completely eliminated.
- Resist the temptation to close credit card accounts once you pay them off, especially older accounts. The length of your credit history and your total available credit both factor into your score. Keeping accounts open (while not using them or using them minimally) can actually help your credit utilization ratio and score.
However, if having open credit cards available creates too much temptation to spend, your financial stability is more important than optimizing your credit score. In that case, remove the cards from your wallet or even close the accounts if necessary to protect yourself from further debt, accepting that your score might take a temporary hit.
Moving forward with patience and persistence
Balancing the high cost of living with credit card debt is genuinely difficult, and progress often feels frustratingly slow. Remember that you didn’t accumulate this debt overnight, and you won’t eliminate it overnight either.
- Celebrate small victories along the way. When you pay off a single credit card, when your balance drops below a certain threshold, when you go a month without adding to your debt—these are all achievements worth acknowledging. The psychological boost from recognizing progress helps you maintain motivation for the journey ahead.
- Be prepared for setbacks. Life will throw unexpected expenses your way, and you may occasionally fall back into old patterns. What matters is not perfection but persistence. When you have a difficult month, acknowledge it without self-judgment, analyze what happened, adjust your plan if needed, and continue moving forward.
- Consider finding community support, whether through financial forums online, local financial literacy workshops, or simply friends who share similar goals. Having others who understand your challenges and can encourage you makes the journey less isolating.
The skills you develop while navigating this difficult period—budgeting, prioritizing, negotiating, creative problem-solving, and delayed gratification—will serve you throughout your life. You’re not just working to eliminate debt; you’re building financial competence and resilience that will benefit you for decades to come.
The path from credit card debt and financial stress to stability and security is absolutely achievable with consistent effort, strategic thinking, and patience with yourself. Take it one month, one payment, and one decision at a time.
There’s always JG Wentworth…
Do you have $10,000 or more in unsecured debt? If so, there’s a good chance you’ll qualify for the JG Wentworth Debt Relief Program.* Some of our program perks include:
- One monthly program payment
- We negotiate on your behalf
- Average debt resolution in as little as 48-60 months
- We only get paid when we settle your debt
If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs. Why go it alone when you can have a dedicated team on your side?
SOURCES CITED
Horsley, S., “Grocery prices have jumped up, and there’s no relief in sight.” NPR. September 19, 2025.
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* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that you consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.