Credit card debt can sneak up on the best of us. After all, there’s just so much stuff to buy. There are new shoes, video games, and that out-of-state trip to Vegas. Unfortunately, the interest rates cripple your bank balance and you soon find yourself in credit card debt. You can feel as if you have nowhere to turn.
First of all, take a deep breath. You won’t accomplish anything if you’re hysterical. Gather the family together and form an action plan. Read through these guidelines for getting out of credit card debt.
Cut the Credit Cards
Stop all spending right now!
Credit card debt just gets worse if you keep piling on top of it. This is why finance companies make so much money. Cut up your cards and sprinkle them in your soup if you have to. Make it physically impossible to use any sort of credit card. If you need them to cover your expenses, cut the expenses too.
Consolidate Your Debt
Debt consolidation doesn’t have to involve negotiating with your creditors to wipe your expenses and put them into one easily manageable sum. You can do this at home. Grab all the credit card bills you can.
Take these figures and write them down on a piece of paper. Add up all the debts to find out just how much you have to pay back. Remember to record the various interest rates on your debts so you can get an idea for how much you’ll have to pay back at the end of the next month.
Knowing each card’s interest rate will allow you to pay off the highest rate card first. Pay the minimum on the lower interest rate cards while putting every spare cent toward the highest rate card. Over time this will eliminate the high rate card and then you can work on paying off the next highest and so on.
Another way to consolidate your debt would be to take a home equity loan (if you have equity) and pay off all your cards. Usually a home equity loan will have a much lower interest rate than a credit card. So you should be able to pay the home equity loan off faster because less will be going toward interest. But don’t fall into the trap of racking up more debt because the balance on your cards is gone or you will be doing exactly the wrong thing!
Another way of consolidating your debt would be to apply for another credit card with a lower interest rate (if you can get it) and transferring your balance there. Once again don’t use this as an excuse to rack up more debt.
The first step to paying your debts is understanding where they’re coming from.
How Much Can You Pay?
Determine how much you can pay each month without making any changes other than preventing any further spending on your cards. Compare it with your disposable income every month. Paying your household bills should always take priority over credit card debt.
The issue now is if you can’t afford to cover anything more than the interest rates. You’ll never escape debt this way and you’ll be trapped forever. If you’re in this scenario, you have to start making changes.
If you’ve racked up a lot of credit card debt it is rarely possible to pay your debts off in one lump sum. Abstaining from credit cards for a sustained period of time encourages you to exercise caution in the future. You need to train yourself in good money habits and self control.
Cut the Luxuries
Cut the luxuries until you eliminate both the interest and the debt itself. It’s only a matter of time before the debt disappears. And in the meantime you’ll learn valuable lessons about managing your money. The key is to make it a priority. Put everything else on hold and do whatever it takes to eliminate the debt you will be much richer in the long run if you aren’t giving a big chunk of your money away in interest.
If you can’t pay your debts, seek professional help. You might be able to take advantage of local government services which can negotiate your debt down. Your creditors might also be willing to reduce the interest rates to make repaying the debt easier.
See Also:
- Are Credit Cards Bad?
- How Inflation Affects Personal Debt Consolidation – Inflation Data
- Save $1000 on Interest – Inflation Data
- Acquiring Credit and Credit Reports – Optio Money
- Overcome Personal Debt | Your Family Finances
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