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4 Tips for Credit Card Debt Management

Credit card debt management is important nowadays. Why? Let’s face it, buying new things is fun and exciting but credit card debt is stressful and unnerving.  Now, this isn’t going to be some beat-you-over-the-head-about-your-excessive-spending article (although we could all use a good eye opening look at our financial habits once in a while). 

Instead, we’re going to focus on some healthy and productive ways to work with and reduce your credit card debt before it takes over your entire life.

Budgeting is better than credit card debt management

I know, I know, I said I wouldn’t brow beat you about the spending habits that got you into your debt in the first place.  Don’t think of this as a scolding.  Think of it as a gentle reminder that budgeting your monthly finances will prepare you for a life free from debt.

That’s right, there are people out there that live without the restraint of credit card debt.  It’s not impossible.  But the best place to start is with the right decisions, and creating a budget that you will stick to is the best place to start.

There are plenty of ways to create a budget.  You can create a budget on a spreadsheet, use personal finance software, or try a few of the new tools online.

Whatever route you choose to take, keep in mind that being aware of your monthly income and expenditures is the best way to begin living without credit card debt.

Spend Less

This guideline is best treated like a band aid, read it quick and any pain you may experience will go away quickly.  I’m not going to drag this out as some social commentary about how our society spends and spends and spends.  The simple truth is this: spend less than what you make to avoid suffocating and in need for credit card debt management.

There, that was quick and pretty painless.  It’s sort of common sense, but we all need a little encouragement in this area from time to time.

Pay More than the Minimum Monthly Payments

Making the minimum required payments on your credit card keeps your account in good standing with the issuing bank, but it does next to nothing when it comes to eliminating the money that you owe.  The scary fact about credit cards is that your minimum payment is about 80% interest and only 20% towards the actual money owed.

One good tip for credit card debt management is to pay double the minimum monthly payment required by your credit card company.  This will help you pay down the principle faster and save you hundreds or even thousands of dollars in interest. 

Another good tip is to do a balance transfer to a 0% apr credit card, though the best scenario is that you pay off your balance each month so you avoid interest altogether, but let’s worry about reducing the debt first.

Debt Consolidation and Settlement

Part of your credit card debt management program might consider: consolidation. If this is true for you, the first sentence about debt consolidation has to be this: research the programs, organizations, and companies that you seek help from and beware of imposters and scams.

That being said, debt consolidation is a viable possibility for your debt situation that doesn’t hurt your credit score like bankruptcy.  There are two types of debt consolidation; 1.) a personal loan to pay off your current credit card balances which will decrease your interest rate and lower your monthly payment;  2.) an organization that specializes in debt settlements and consolidation.

Usually, the debt settlement and consolidation companies can work with your credit cards to negotiate or forgive a portion of what you owe.  But these organizations usually come with a price tag, so be careful which one you choose.

A great place to start learning about debt consolidation and debt settlement options is the Federal Trade Commission’s debt relief and consumer protection website. There is plenty of information and numerous web links to reputable organizations so you can easily understand the options available to you.

Closing Remarks about credit card debt management

Another option would be to hire a personal financial advisor as you attempt to live a life free from credit card debt.  Although financial advisors are, for the most part, good at what they do, they’re pretty expensive and the information they offer can usually be found in books or online.  But sometimes we just need face-to-face guidance.

One of the final possibilities for you is bankruptcy.  It’s scary and it harms your credit score very badly, but sometimes it’s the only option.  If you owe the credit cards four or five times your annual income, you might have to declare bankruptcy to get back on the road to recovery.

Whatever you decide, I wish you good luck.  Remember, it’s not always going to be easy, but nothing feels as good as financial freedom and warm sunshine on your economic horizon.

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