The number one financial problem that people face is credit card debt. When it is properly managed then it can help us even out our bill payments and pay unexpected bills. The problem is when we start to get behind and the repayments start to spiral out of control. It takes hard work and willingness to change but by creating a plan and making paying off your credit cards a priority you can become debt free and secure your financial future.
Signs Your Credit Card Debt Is Dangerous
Credit cards are very profitable for the institutions that offer them and so they make them easy to obtain and easy to increase spending limits even though some people default. It is up to us to use our credit cards properly or risk finding our debt levels at dangerous levels. Here are some signs that you need to take action about your credit card debt.
- Paying the minimum amount an your credit card accounts
- Not having any savings
- Delaying paying bills because you do not have the money to pay them
- Getting reminder calls about bills or late payments
- Pay one credit card bill with another credit card
These are signs that your finances are under stress and that you need to take action before your finances are harmed and future options are taken away.
Get All of Your Information and Make a Plan
The best way to ensure your financial future and to start paying off your credit cards is to make a plan. The way to start planning is to gather all the information and yes, you will need to make a budget. A budget is not a punishment for getting into financial but a way to understand where all of your money goes from each paycheck and how much debt you actually owe. These are the building blocks that you can use to make a plan that allows you to reign in unnecessary spending and target debt in a useful way. Information that you will need to make your budget and list of debts includes:
- Recent pay slips
- Paid and outstanding bills
- Credit card statements
- Loan and mortgage documents
- Bank statements
- Overdue notices
When you have all of the documents then you can put together a list of debts and payments and a budget that lists your regular payments so you can see your financial position. This will help you to plan out how you can firstly get your debt under control and secondly how to start paying off your credit cards in a structured way.
The next step is to look at way s that you can increase your income or lower your spending so that you have the maximum amount of money available to reduce your debts. This takes real commitment because every step you take will mean more work or sacrificing something but remember that if you do not take action then you could face financial oblivion. Some simple ways that you can increase income and reduce expenses such as:
- Doing more overtime at work
- Taking a second part time job on the weekends
- Cutting service such as satellite and cable
- Eliminate morning coffees, snacks and expensive restaurants
- Only make necessary purchases
The best way to reduce debt quickly is to choose either the smallest debt or the debt with the highest interest rate and then put every spare cent you have into reducing that while paying the minimum on your other debts. This will rapidly reduce the debt and when it is eliminated you will be able to devote that amount to the next debt in line.
One of the best ways to stay motivated is to give yourself a small reward every time you have been successful in making the next step in paying off your credit cards. This reinforces that you have done something good and helps you attack the next debt with renewed enthusiasm.
Other Ways to Help Ease Credit Card Debt
In some cases you might find yourself in a situation that needs stronger action. A good way to start is by contacting your credit card providers and discussing the situation with them. They may be able to give you an extension of time to pay for a short period or to reduce the interest rates that you are being charged.
Consolidation can be a great way to roll all or some of your debt into a single monthly payment. This can be done with a consolidation loan or by taking advantage of a low or no interest credit card balance transfer offer. These will give you the breathing space you need to begin paying off your credit cards.
If things have progressed to a stage where you are not able to obtain more credit and cannot make payments to cover all of your debts then seeing a debt specialist at a debt consolidation company may be helpful. They can negotiate a payment plan with your creditors on your behalf and help you to get your finances back on track.