Sunday, June 17, 2012

How To Beat Credit Card Debt

It's all too easy to get bogged down in credit card debt. In the current economic climate, many responsible, intelligent people find themselves struggling with debt they can't repay. It's easy for your situation to begin to seem desperate, and people facing large amounts of debt often sink into depression and fear.

Don't let this happen to you! Your credit card debt may seem insurmountable, but there are simple steps you can take to beat credit card debt once and for all without destroying your credit rating. Follow these simple steps and watch your debt disappear.

Step One: Stop Spending

It seems obvious, but if you're facing a mountain of debt, you have to stop spending. This can be a real challenge if you're having trouble making ends meet, but it's one you have to face. Where can you cut corners? How can you bring your spending under control? What can you get rid of? This is a necessary first step to curtailing your debt.

Step Two: Get Rid of (Most of) Your Credit Cards

If you're one of the thousands of people shuffling debt between a dozen credit cards, it's time to stop. Pick one ideally the one with the lowest interest rate and cut up the rest. If you don't trust yourself with even one credit card, consider asking someone you trust completely (like a spouse or parent) to hold onto that card for you.

Step Three: Don't Ignore the Problem

The biggest mistake people make when facing credit card debt? They ignore it. They don't answer calls from collection agencies, they shred their bills unread, and they avoid looking at their bank statements.

This is a perfectly understandable response, but it's not going to solve anything. No matter how difficult it is, you have to get an accurate understanding of your situation. It may not be as bad as you think or it may be much worse. Either way, it's time to sit down with those credit card statements and figure out exactly how much you owe.

Step Four: Budget

Look at what you're spending and what you're making, and figure out how much you'll allow yourself for each expense for the coming month. Make sure that debt repayment is one of those expenses before you proceed to step five, you'll need to know exactly how much you can afford to put towards your debt.

Step Five: Figure out a Repayment Plan

It may surprise you to learn that credit card companies aren't your enemies. They know that once an account goes to a collection agency, they're very unlikely to see their money again. For that reason, they welcome any attempt you make to repay your debt.

This means that if you contact them and explain your situation, many credit card companies are willing to accept lower monthly payments, charge less interest, or forgive missed payments in exchange for your commitment to work with them towards repayment.

Credit card debt is frightening and difficult to deal with, but it doesn't have to spell financial ruin. Take a few deep breaths, confront the problem, and you may be surprised at how quickly you're able to beat credit card debt for good.

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