Finding yourself in credit card debt is not an unusual predicament these days. It can happen to almost anyone. Once it happens it can feel hopeless but if you get serious you can find yourself financially solvent. It will take commitment and organization but you can do it.
Know Where Your Money Is Going
The key to ridding yourself of credit card debt lies in paying off the money that is, essentially, a loan. If you charge $100 at the grocery store and your interest rate is 20% you owe $120 for the groceries. If your monthly payment is $20 you are paying only the interest. The principal has not been reduced. The following month you will still owe the $100, plus a new month’s interest. Consider if you paid $40, you are only paying 20 percent of your actual debt. It is not possible to pay off your debt if you pay the minimum. You will always only be touching a percentage of your core debt while the remainder accrues interest.
If you have been on time with your payments call your credit card provider and try to negotiate a lower interest rate. If you have been a card holder in good standing for some time most companies will do their best to deliver a lower rate. If you succeed your bills will be lower, use this as an opportunity to pay more than they ask for to decrease the principal.
If the card company cannot reduce your interest try transferring your debt to a new card with a lower rate or zero interest for an introductory period. This will be an option if you have a good credit score. The more you pay per month the faster you reduce both the principal debt and resultant interest.
Tips To Keep You on Track
Make a Plan
Carefully make a plan you can live with. Look honestly at what you can afford, where you can reduce and where you have to spend. Start with something you are comfortable with to ensure you don’t get frustrated and give up before your debt problems are solved. Add to your payments when you are able.
Set Smaller, Attainable Goals to Keep You Going
In order to keep you on track and excited about your progress reducing your overall credit card debt it may help you to include points in the process where you reward yourself for staying with the program. Try not to let these rewards be something you spend money on. Perhaps visiting a friend you are usually too busy to spend time with, or giving yourself a weekend free from your usual tasks to do your favorite things.
You could also choose something you would like to do when you are free from credit card debt. Compute the money you will be able to save when you are debt free, consider taking the money you are paying the credit card company each month and putting it into a savings account when your bills are paid off. After making overpayments for three months imagine what you would do with those three payments in your savings account. Again, at six months, what kinds of things would you do with those savings? This will not only keep you motivated to stick with your plan but also help you to see what good financial planning can accomplish for your future.
Share Your Story
There is no need to be embarrassed by your situation. Tell your family and your friends about your plan to take your credit card debt problem in hand. Chances are they have faced similar issues and may have some great tips for making plans or saving money. You may even find others who are in the same predicament and be motivation for each other. If you are honest with the people in your life about what you are trying to do you will not have to make excuses for not going out to expensive dinners or other costly events with them. Keeping your reasons for opting out to yourself could cost you friends.
Instead you may find it good for everyone to pool your resources. Have dinner at each other’s homes, let everyone pitch in with dishes and preparation. Share books, magazines, carpool when you can. If you and your friends are the same size you could even share clothes to increase your wardrobe without hitting the mall. Share your stories of saving and success to keep each other going when the urge to give up hits.
Use this time to make a permanent change. Understand there is power in purchasing only what you can afford at the moment. Freedom from credit card debt will allow you to know where you stand at all times and take better control of your life.