Seven Credit Card Debt Reduction Strategies
By FutureNestEgg | August 23, 2008
Nation’s credit card debt has been mounting at an alarming rate. If you are one of those credit card owners, struggling to pay off your debt, then here are some steps that can help you:
It All Starts With You
This might sound like a cliché to many. But the fact is this is the most overlooked step. Everyone wants to get out of debt but only a few are determined to get out of debt. When you are determined, ideas and ways to get out of debt starts flowing in. When you are determined, you will leave no stone unturned to get out of debt (except ‘stealing’ – you don’t want to go that way).
When you are in debt, it is easy to pass the blame to others or to circumstances beyond your control. Some circumstances are beyond anyone’s control but you have to stop using that as an excuse for being in debt.
You need to ‘accept’ the situation for what it is. Stop blaming the rising prices, the government and banks – make yourself solely responsible for the situation you are in. Only when you make yourself responsible, you will be given the ‘power’ to fix the problem.
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Current problem is – “You are in huge debt”. Solution – “Find ways to eliminate the debt”. Get consumed with the problem. Make fixing the problem your sole focus. |
Analyse Your Situation
Sit down with a cup of coffee, a note book, a pen, calculator and your latest bank/debt/loan statements. Add up all the debt. Write it down. And then write down you income. Your goal for the next few months/years is to spend much less than you earn so that you can repay every extra dollar into your debt account.
Consolidate Your Credit Card Debt
Speak to your bank manager and see if you can consolidate all your credit card debts into one card.
Also consider using the zero balance transfer cards. But you have to use them wisely to reap the rewards or you will end up incurring more pain than you already face.
One At A Time
If you cannot consolidate your cards, then attack it one at a time – It makes financial sense to attack the one with the highest interest rate first. But if the one with highest rate is also the one with the maximum debt then bear in mind that it will take a long time to repay that debt. Some people might not be comfortable with this. They might need some encouragement – I am one of them. If you are like me then attack the debt with lowest balance first. Finish it off and then move to the next one. The encouragement you get by seeing a zero balance on a loan is highly motivating.
Any Savings
If you have any savings stacked up somewhere, anywhere, then may be its time to get that out and repay your debts. You will be paying more interest on your debts than what you will be earning from those saving accounts.
Stop Using Cards
This is probably the most important one. If you keep accumulating more and more debt then your debt will never be paid off,. You need to pay of what you currently owe and you can do this only if you don’t take on more debt. Put your cards into a blender. Get a reality check – You are in Debt – So no point living a fancy life and flashing those credit cards.
Budget Budget Budget
Your aim is to spend less than you earn. You cannot do this if you don’t track your spending. You need to monitor all your outflows. Compare each month’s outflows with the previous month’s. Cut down on anything and everything you can – even little things count.
A Figure
Arrive at a figure that you can contribute every month towards your debt reduction. Use a calculator and figure out how long it will take to repay the entire debt if you stick to that figure. Sometimes you may be shocked at how long it will take – This shock might force you to contribute more towards your debt reduction program.
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Topics: Credit Cards | 3 Comments »
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