Debt is a well-known cause of serious stress, as well as contributing to both relationship and lifestyle pressures and difficulties. So are there any ways of dealing with the problem of credit card debt.
1. If credit cards are the bane of your financial life, then the first thing to do is to cut them up! Seriously, go and do it.
2. The second thing to do is to be realistic about the level of the debt, as it’s impossible to remedy it without knowing the extent of the problem. So, don’t ignore credit card statements, instead get them all out and lay them out so you can see exactly what you owe and to whom. Make a note of the minimum expected payments and interest levels you go.
3. Once you know exactly where the credit card debts lie and how much is owed, the next step is to identify which of the credit companies are charging the most interest – these will be your priorities for paying off.
4. Next do the same exercise with your budget: work out your income and household outgoings, including direct debits and day to day expenses. Don’t include payments to your credit cards at this stage.
5. Now look again at your regular outgoings and see where you can reduce some of these costs, for example gym memberships you don’t use, travel costs to work when you could walk or join a car pool, food budget – easy savings can be made by having a realistic look at how to reduce these outgoings.
6. Basically, everything you are then left with should be used towards paying off your debt. If you know that hitting unexpected problems is what causes you to use your credit card in the first place, then organize a small savings account to act as your emergency fund and pay a small amount into this each time you get paid.
7. Now balance what you are left with against the minimum payments you need to make. See if you have enough to make higher payments on those cards that demand a higher interest rate.
8. If your payments are more than you have left each month, don’t panic. It’s worth looking around to see if you organize credit card debt elimination by consolidating all of your debts with a low interest loan. This helps because the loan interest will be less than the individual cards and one single monthly payment will be far less than several card payments!
9. If your credit rating won’t facilitate a new loan or credit agreement, speak to your card companies individually to see if they will offer any credit card debt settlement deals. These involve your account being ‘frozen’ so that you can’t add to your debt and possibly obtain credit card relief by also putting a stop to the interest accumulation, so that no extra interest is added to the debt: what you pay from now on will really start to reduce that credit balance. Often the credit card companies will accept a smaller minimum payment too, so work out what you can afford to pay them and offer this – but do pay it regularly and on time!
10. Lastly, do take advice from a debt advisory service. Joining one of the many programs around will give you support to get debt free and they may also be able to mediate for you with credit card companies.
Remember there’s no shame in things getting out of hand, but there is shame in ignoring it and not dealing with it, so if credit card debt is a problem for you, cut up those cards and then take ten positive steps towards being debt free!