Is most of your debt with credit cards? Do you have lots of cards with large balances? Are you having trouble making your minimum payments?
Credit card debt is one of the worst kinds of debt. It is considered empty debt, as you often have little to show for it. With a mortgage or car loan, at least you have the house or car. Credit card debt tends to sneak up on you with lots of little purchases. This is especially true these days where almost all businesses accept credit cards.
If you want to get out of credit card debt on a do it yourself plan, it will take some time and effort. Still, it is very possible to make it happen.
The first step is to stop using your credit cards, now. Cut them up and throw them away. Stop the cycle or you will never stop this process. If you think you have the willpower, save one for emergencies. Otherwise, get rid of the cards even before you pay off the accounts.
The next step is to make a chart. Include all your accounts, with each ones balance, interest rate and minimum payment. In this chart, include the account number, company name and customer-service phone number, plus a space for notes. This handy spreadsheet will be your DIY guide.
What you do next will depend a lot on how bad off you are budget-wise. You will need to have a realistic budget in place, which will help you determine how much of your income you have to put towards your debt. Once you know that number, you can then determine how to apply it to your accounts.
The first question: do you have enough money in your budget to pay off the minimums on all your accounts? If you don’t, you will need to get on the phone with some of your largest balance accounts and negotiate. If you were paying a credit counselor, that is what he would do. He would call the customer service number for each card and explain the severity of the situation. You might be surprised, but often creditors will work with you. Be honest and polite. Tell them what you can afford to pay. Ask them to reduce your minimum payment, interest rate, even your balance. It never hurts to ask.
After you have made the best arrangements possible to reduce your credit card situation, it is time to start making those payments. Always hit the ones with the higher interest rate first and work you way down. If you are patient and persistent, you will get to a debt-free situation.
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