How to get out of credit card debt
Credit cards make spending easy…and expensive. When you use credit cards to pay, you don’t have to think about parting with your own money for up to 6 weeks. When you charge something on a credit card, you plan to pay off the balance when you get your statement but sometimes you aren’t able to pay it all back. It is at this point that credit card debt starts to creep into your life little by little until one day you are overwhelmed.
Let’s talk about getting rid of that credit card debt now.
Credit card companies want you to pay them back. They are willing to work with you or a credit counselor if you are having difficulty paying them back. They don’t want to make it too hard for you to pay them back because they are well aware that the alternative, forcing you to file bankruptcy, may leave them with nothing. Creditors may waive fees, reduce interest rates or agree to more flexible repayment terms, all you have to do is ask.
Credit Counseling has been around since the 1950’s and is an effective way to get out of debt provided you can continue to pay the minimum payments and aren’t more than 6 months behind. If you have $3,000 or more of credit card debt and would like to consolidate all of your unsecured payments into one low monthly payment every month, then a Debt Management Program might be best suited for you. Talk to a credit counselor to see if they can help you reduce your debt and put you on a path to be debt free.
Credit card debt can be overcome only with an extremely disciplined, persistent behavior. It is not possible to overemphasize the importance of keeping the costs down (by downsizing wherever possible, selling assets you don’t need, etc.), looking for ways to earn extra money, and using all the money possible to pay the debt off.
Some people may not want to use a debt management program. The truth is that most debtors don’t need a DMP. One free alternative is to list your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. And then once you have this list, start paying off the smallest debt as fast as possible and then work on the next one. Pretty soon, you will have an effective debt snowball that can eliminate your debt in 1-3 years. This method was made popular by Dave Ramsey in his Total Money Makeover book.
You may also be able to use a debt settlement company to help you reduce your debt. Debt settlements by no means provide a way to legally eliminate debt obligations with no repercussions. They have their benefits, but they also have some consequences you need to be aware of. By law, even the reduced debt amount of the settlement accomplished by a financial program to legally eliminate debts must be disclosed to the IRS. Debt settlement is a program with your creditors to pay off unsecured debt such as credit cards. It does not apply to secured debts such as student loans, auto loans, and home mortgages.
Credit cards are a financial boon only if users don’t get carried away and misuse it. It’s a tool that makes money available so learn to use that money to your advantage rather than run up non payable bills. Credit card debt is one of the last things you want at any point in your life. Use some of the proven methods above to get rid of your debts or you can talk to a company like Credit Solutions to help you eliminate your debt.