How to Clear Up Credit Card Debt
In today's economy, people are reaching for their credit cards now more than ever. Whether it's to pay monthly bills, vacations, or holiday shopping, credit cards are making it far too easy to swipe and forget -- until that dreadful monthly bill arrives that no one ever really looks at. Unfortunately old habits die hard, and most people look right to the "amount due" box, write a check, and wait for the next month's bad news. Credit card debt is a sinking ship, literally. If you only pay what is due every month (interest only), then you will be paying that forever. Get off the sinking ship by getting out of debt as soon as possible.
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Instructions
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Instructions
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1
Create a financial binder. Separate sections and label them. Start with your monthly budget, and then list your credit card debt. Track all expenses and payments in your new organizer. This will help you visualize where your money is going.
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Make a budget. Be realistic but disciplined. Start by writing your net income per month. Then list all of your bills and expenses, such as utilities, rent, gas, telephone, food, etc. Exclude your credit card bills for now. Deduct your bills from your income and see what money is left. You can then use the remaining funds to distribute among your credit cards to pay them off faster.
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3
Gather all of your credit card statements. Collect all necessary information such as, balance, annual percentage rate, and due date.
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4
Use the Credit Card Calculator. There is a valuable tool available online called a credit card calculator. You can find out exactly how much per month you have to pay to get out of debt by a certain date. For instance if your balance is $2,500.00, your annual percentage rate is 29.99%, and you want to pay it off in three years (36 months), your monthly payment would be $106.12 a month.
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The easiest way get out of debt is to pay your bills weekly. Rather than having a large amount you can break it down weekly and it seems more affordable. Then the $106.12 a month is $26.53 a week. All credit cards offer online service. You can either set up automatic payments or just pay manually every week on pay day.
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Avoid Temptation. Easy access to your cards makes temptation of spending hard to resist. Try taping your cards together and put them out of sight in your wallet. This way you have them in case of an emergency, but having to remove all that tape with a line of people behind you at the department store will ensure a reduction in spending.
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Tips & Warnings
In order to prevent relapse with your debt, call and have your credit limit lowered. Now you will have what you need for emergencies but not enough to get you back onto that sinking ship!
Beware of Debt Consolidation Scams. Some companies encourage you to stop paying your bills in order to "settle" with credit card companies. This will lead to derogatory credit and a bad credit score. Also sometimes you will end up paying more in the end with all of the hidden fees than you would by just handling it yourself. However, there are some that are legitimate; just make sure to do your research beforehand.
