Credit Card Debt Consolidation
Knee Deep in Credit Card Debt
When people find themselves with mounting credit card debt, there are many guidelines that can help them manage that debt and pull themselves back into the black.
Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car?
You’re not alone. Many people face a financial crisis some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. But often, it can be overcome. Your financial situation doesn’t have to go from bad to worse.
If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. Debt negotiation is yet another option. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.
If you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.
The first tip, and one that is probably the smallest first step towards paying off debt, is to put a stop to all credit card use. One has to first stop incurring new debt before being able to take a bite out of current debt.
A second step is to keep no more than two credit cards active. Using multiple credit cards makes it much more difficult to gauge how much is being spent, and much easier to make impulsive purchases. Remember, a lot of little debt can amount to a pretty hefty sum.
Third, set a realistic goal for paying off debt. Once it is determined how much is owed, a plan should be created that decreases debt over time. A possible plan would be to set a percentage of earnings aside each month specifically for debt repayment. Planning where to allocate earnings each month decreases impulse buying.
A fourth option is to consolidate debt, either placing debt from multiple credit cards onto one lower interest card, or finding another loan vehicle with a lower rate such as a home equity loan, where debt can be transferred. This step is helpful in many ways. It allows a deeper understanding of one's debt by having it all in one place, and it typically saves a lot in interest payments. Consolidating loans, however, makes it much easier to take out new credit cards and incur further debt, which completely defeats the purpose of consolidation. There are banks, financial planners, and very informative books that can help guide one through this very important financial phase
