Credit Card Debt - Time to Answer the Call

If you're not picking up your phone half the time to avoid dealing with creditors it's probably time to address your debt situation. Millions of Americans are over their heads in credit card debt. It can be a very helpless feeling. While there are no quick fixes or magic bullets to wipe away your credit card debt there are some time proven strategies that can help you to turn things around.

  • Make a Budget
  • Talk to Your Creditors
  • Consolidate Debt
  • Pay Cards Down

Making a Budget

In order to get a hold of your credit card debt you need to first make a sober assessment of your day-to-day finances. You may want to turn-tail and run from making a budget but keep in mind it's a lot less painful then continuing to rack up debt. The goal of a budget is to determine how much you can afford to spend each month. Since you intend to start paying down your credit cards you're going to make a budget that includes increased payments toward your balances not just the minimums. There are lots of ways to physically make a budget and you need to find one that works for you. Here's one simple way:

    1. Take a small pad or notebook and you can carry with you writing down every single thing you spend money on for the next 8 weeks. Include bill payments, bus fare, your morning coffee - you name it. Start a new page for each week. Include in your monthly expenses an amount above your current monthly minimum payments on your credit cards so if you're currently paying $300 per month in minimums budget in more.
    2. At the end of the 8 weeks write down all of your seasonal or quarterly expenses that didn't come up in these 8 weeks like taxes or holiday gifts and divide by 12. Your now have everything you need to determine your monthly expenses.
    3. Next list your sources of income for the year; salary, wages, alimony, child support, pension, etc. and determine your average monthly income.

If your expenses are more than your income you have two options; make more money or spend less. Look for places where you can do both. Since you've budgeted for larger credit card payments you're now ready to apply some new strategies for bringing down your debt that will give your increased payments a real impact.

Talk Don't Duck

It's very tempting to bury your head in the sand when creditors are pursuing you. But keep in mind they want you to pay off your credit card debt not go bankrupt. Start by calling them and explaining that you're having trouble making payments. If you're non-confrontational and straightforward with them they may be very willing to reduce the interest rates on your current debt or even wipe out part of your balance to help you pay it off.

A Credit Card Offer You Can't Refuse?

You've probably received credit card offers in the mail that say things like "0% APR for 12 months on balance transfers". Balance transfers can provide a great way of brining down your debt. By taking a low interest card and using it to pay off several other higher interest cards you can often lower your monthly minimums leaving you more money to apply toward principle. Just beware that all offers are not equal. Shop around, read the fine print and do your homework before transferring balances.

People really do find solutions and get out of credit card debt but it doesn't happen by burying your head in the sand or just making your monthly minimums.

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