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Getting Relief from Credit Card Debt

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Credit Card Debt – Tips to Get Out of It

Before I got married, I had some credit card debt due to a combination of bad budgeting and impulsive buys. I worked hard and managed to get out of debt, giving me less stress. I know I’m not the only one who has been with credit card debt.

Credit card debt has become common for some people. In fact USA Today estimated that the average credit card debt for an American household is $8,565. What makes this worse is that credit card debt tends to have high interest rates, meaning that it can grow quickly and become a huge burden on your finances.

Is Debt Counseling the Way to Go?

I’ve noticed on TV more commercials on consolidating debts claiming that they can drastically reduce your payments. It looks so good, so easy to get your finances in order, all you have to do is call the company and they will fix it for you. Watch out for some scams where you pay hundreds of dollars up front and encourage you to stop making payments on your credit cards.

It is possible to handle this on your own, saving you money while taking care of your finances.

Pay Down Credit Card Debt on Your Own

If you’re looking to reduce your debts without getting into a debt consolidation program, here are some tips that have helped me and others. I’ve used them not only with credit card debt, but along with my husband’s help, paying off the car loan.

Discover the exact amount of debt you’re in

Find out how much debt you’re in by either calling up your creditors or compiling all your current bills. Grab or create  a debt reduction spreadsheet and list all your creditors, the interest rates, and the total amount you owe.

Stop using credit cards and develop a spending system<

When I had credit card debt, taking the cards out of my wallet was a easy and effective step. I had less temptation to rely on them when I wanted to make an impulse buy. I was creating a barrier for myself and improving my finances. Hide them, freeze them, or perform a plasectomy.

Something that worked for many people is an envelope system. Use either a physical envelope budgeting method and take out money you need to eat, tolls, etc. If you run out of money, then make a peanut butter and jelly sandwich or bring leftovers for lunch. I personally use Mint to keep track with my spending. You can set it up so you can receive text messages as you’re approaching your budget limit.

Set up a payment plan with your credit card company

Now that you have a spending system, you know how much money you have to put towards paying down debt. When you speak with your credit card company’s customer service representative remember to be polite and firm. You’re trying to get them to give you a better payment plan; being rude will not accomplish that and could make it worse.

  • Ask them to waive fees and lower your interest rate. Again, some credit card companies are more willingly to work with you as the economy has hit many people hard. They would rather get some money from you than no money.
  • Get your payment plan in writing to protect yourself. Even if they agree to accept a lower settlement amount and you can pay over the phone, have the agreement in writing before you pay it off. It will only add to your headaches if they go back and say they never agreed to the plan.

Automate your credit card bills and tackle one card at a time

Protect yourself from yourself and automate your debt payments. This has been a HUGE help for me. You can bypass a lot of mistakes and relapses if you automate your credit card payments with online bill pay. Most banks and credit unions offer this feature for free.

Try to pay the minimum on all but one of your debts.  Put the rest of your debt reduction money into either your debt with the highest interest rate or the lowest balance.

Highest interest rate method is the financially sound decision and lowest debt is the psychologically empowering decision. I went for the debt snow ball method (lowest balance first) to give myself a win quicker. If you’re looking for money to reduce debt, try cutting unnecessary expenses or get apart time job exclusively for your debt repayment.

YOU have to be committed to a plan and stick to it.

Develop a support system that can help you reach your financial goals. To tackle my student loans, I have my husband in my corner. I also have some wonderful resources on the web with other personal finance bloggers. I also recommend being support for a friend as well. It can be helpful for yourself as well as for your friend.
Your Take
What tips do you have on keeping your finances in check?

Photo Credit: BigTallGuy

by Elle Martinez

Elle Martinez helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second..

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