It can happen to anyone. You find yourself shuffling bills around, holding off on one to pay another and paying bare minimums to try to balance your paycheck between getting the creditors off your back and paying for essentials. These days it seems like more people are struggling with too much credit card debt than ever. Does the situation sound familiar? It can be frightening and overwhelming to know you can’t afford to pay your bills and still have enough money left to live on.
Do not despair, you are not alone, many have gone through this before and we have some tips below to help you get some relief and begin your way back to financial solvency.
1. Start with a lower interest rate
Once you realize you are in over your head with too much credit card debt the first thing to do is try to get a lower interest rate than you currently pay. Make a call to your credit card company or the holder of your loan and ask for a reduction of your interest rate.
There is no guarantee that they will be able to assist but most of the time if you are friendly and polite, are able to show them that you have been a loyal user of their card who until this point has always paid your debt on time they will most likely be willing to work with you. The savings from this one phone call have the potential to be substantial, adding up to hundreds in interest that would not have ever touched your principle balance being waived away.
If you are unsuccessful with your credit card company, or if you have a number of debts that you are struggling to keep on top of it may be worth looking into a debt consolidation loan. This loan will pay off your multiple debts leaving you with a single payment per month, make sure the interest on this loan is lower than that of the bills you are trying to consolidate and you will not only get your bills paid off more easily with a single monthly payment, you’ll save money.
2. Try to defer payments or get on a payment plan
If after attempting the first tip you still find yourself unable to meet you minimum amount(s) due a month it may be time to speak to your creditor and ask about deferring payments for a short time to get yourself back on your feet financially. You could also speak with them honestly having too much credit card debt, the bills you have to pay and how much money you have available. Most are able to look at the figures and come up with a payment plan that allows you to pay your debt back more slowly with lower monthly payments. Most companies are interested in good faith money, they would rather have a smaller payment than have you default and have to write off your unpaid balance as bad debt.
You may also want to use a balance transfer to decrease the amount of money you pay monthly. Take advantage of low promotional interest rates of new cards by transferring your debt to them. You may have to pay a transfer fee to bring the balance over but it is frequently much lower than the savings you’ll see in the change of interest.
3. Set Aside a Specific Amount from Each Check for Bills
Sit down, look at your bills and figure out how much you can pay a month and stick to it. Look at that portion of your check as pre-spent, it is not yours, it is already property of the credit card company.
4. Have A Plan
If you don’t have a financial plan for your money you will spend it unwisely. Paying off your debt has to be the first priority. Keep that money aside as discussed above. Next sit down and figure out what spending is essential, use a free online program if you need to. Set up a realistic budget and stick to it.
5. Stay Motivated
Speak with friends who have had too much credit card debt and either have successfully gotten out of the situation or those who are currently going through the same problems. Help each other with support and suggestions for saving money.
Seeing your debt get paid down can be great but after a long time it can get old. Try making a wish list of things you would like to be doing with the money you have to use to pay bills and realize how close you are to being debt free and being able to do all the things you want.
There are more ways to rid yourself of debt if you still need help, as long as you are serious, you can be debt free.