Getting into credit card debt is easy: Just use your good credit score to apply for multiple cards, spend up to the limit on all of them, and sit back as the bills and PAST DUE notices asking you for money you don’t have pile up at your door.
Getting out of credit card debt is much harder. It requires discipline and foresight, which many folks don’t have. It also requires a willingness to make sacrifices, which might be hard as well. And, most importantly, if you’re in serious credit card debt to the point where you’re barely making your minimum payments or, worse, missing some of them, it takes the integrity to admit that you may need the services of a debt consolidation professional.
What Are Credit Card Debt Cures?
There are many credit card debt cures out there, some of which work better than others. Some require little more than common sense. For example, the most common route by which folks find themselves in credit card debt is by spending more than they can afford to. The easy solution to this problem is to cut back on expenditures. It may be painful at first, but you’ll find the payoff is well worth the sacrifice.
The first step to cutting back on your spending is to make a budget divided into two categories of expenditure: necessary and unnecessary. Necessary expenditures might include grocery store purchases like food staples and toiletries, car repairs, and utility bills. Unnecessary expenditures are everything else. Unfortunately, that means you’ll be cutting back on dining out, designer clothing, and new electronics – iPad 3 anyone?
Cutting back on your spending is important because it helps stem the growth of your credit card balances. If you’re only making the minimum payments on your cards and continuing to use them for purchases every month, chances are they will continue to grow unless you take action.
Here’s an example: If your credit limit for the two credit cards you use is a combined $10,000 per month and you only use them for purchases worth $3,000 per month, you can keep using your cards indefinitely and probably afford the minimum payments on them each month.
However, if you only have $2,500 in monthly income to put towards your purchases, you’ll be adding an extra $500 to your balance each statement period until you significantly reduce your expenses. If you’re in this situation, you may want to reduce your spending to $2,000 per month or less. That way, you can lighten the burden by paying down your balances by $500 per statement.
If simply cutting back isn’t enough, more severe credit card debt cures may be necessary. You may need to actively shrink your balances by refraining from making any new purchases on your credit cards until you’ve either significantly reduced their balances or paid them off entirely. Switch to debit cards or straight cash for the time being. It may be painful at first, but in the long run, so is spending more than you earn. You’ll thank yourself down the road.
Debt Cures When Your Expenses Exceed Your Income
Many people find themselves in credit card debt for reasons beyond their control: job loss, marital strife, and major unexpected medical bills. If you’re in this situation, you may find that even debit cards and cash aren’t strong enough debt cures. When you’re unemployed, it’s hard to afford basic staples for your family, let alone meet your minimum credit card payments or begin paying down your balances. If you’re unable to work for medical, you’ll find yourself in a similar situation. Disability and unemployment insurance simply aren’t enough to pay for the kind of lifestyle that got you into credit card debt in the first place.
Besides cutting back on spending, the most common way out of debt is simply to work harder and work smarter. If you’re able to work and don’t already work extremely long hours, consider picking up a second job or searching for freelance work commensurate with your talents. It may be difficult to devote your already-precious free time to another employer, but the threat of falling behind on your minimum payments should make it bearable.
The best way to escape debt is credit relief counseling. Whereas debt consolidation loans merely add to your debt, in some cases actually increasing the effective interest rate on your debt, debt relief professionals can directly negotiate a settlement with your creditors that drastically reduces your balances.
The process is simple: Debt consolidation companies speak with your creditors and negotiate a reasonable reduction in each outstanding balance. Every case is different, but you may see the total amount you owe decrease by 50 percent or more. Once a settlement has been reached, you’ll be responsible for just one monthly payment to your debt consolidation company. This is the best credit card debt cure of all.