When people run into credit problems, the first thing they do is try to find a quick way out. The truth is that there is an effective way to clear credit card debt, but it takes time and you need to have the patience necessary to see the process through to the end.
There are several advantages to clearing credit card debt. The first advantage is that you will always have the cash you need on hand to buy groceries and put gas in the car. The other advantage is that you can save money to buy larger ticket items such as televisions and even cars. When you pay in cash, you own it outright.
The biggest advantage to owning something outright is that you are not paying for the interest charges on the loan. Interest can add a significant amount of money to the cost of buying an item. You would save hundreds, and possibly thousands, of dollars by buying your next car in cash instead of getting a loan.
There is a step by step process you can follow to clear credit card debt. Once you are done, you will be able to enjoy the benefits of a debt-free lifestyle.
– Cut Back on Spending
Developing good spending habits takes time and it is something you should start immediately. Monitor your spending for a complete month by creating a handwritten log of every purchase you make and then analyzing your spending at the end of the month.
When you write out how much you spend, then you will be able to see how much you are saving when you cut out purchases such as that cup of coffee every morning and lunch every afternoon. By making your own coffee and bringing a lunch, you can save hundreds of dollars per month.
Establishing these habits is important early in this process because you will need the discipline of frugal living to help you pay off your debt when the time comes.
– Debt Settlement
Once you have your spending under control, it is time to attack your debt directly. A debt settlement company will negotiate settlements with your creditors on your behalf and help you reduce your balances.
After your creditors have agreed to your settlement offer, you must make a lump sum payment or series of payments to pay the settlement amount. With a good settlement program, you can have your debt paid off in as little as 24 to 48 months. Because you took the time to learn how to live a more frugal lifestyle, you can shorten that time period considerably.
– Paying Off Your Debt
The extra money you freed up by having your debt settled and the money you are saving by lowering your spending can now all be focused on paying off your debt. It is important to always leave yourself enough money to pay your bills in cash each month so that you do not need to rely on credit.
One of the best things to do at this point in the process is develop a monthly household budget. This is a spreadsheet where you list all of your monthly bills and expenses and compare that to your income. Everything that you do from saving for Christmas gifts to your weekly entertainment spending needs to be an entry in your budget.
Once you have your budget in place, then you can see how much money you need each month and how much extra you have. This will allow you to develop a comprehensive plan to apply as much money as possible to paying down your settlement account. If you do this properly, then you will be clear of credit card debt before the 24 to 48 month period expires.
After you have cleared out your credit card debt, then you need to focus on maintaining your good spending habits to prevent yourself from going into debt again in the future. The household budget that you developed during the process of reducing your credit card debt is the tool you will use to maintain your finances.
It is reasonable to say that you can readjust your budget to save more money for the things you want and maybe even allow yourself a little extra cash each week for entertainment. There is nothing wrong with rewarding yourself for clearing out all of your credit card debt and developing good spending habits.
We are an organization of credit card relief experts. We can analyze your situation and give you a plan that will help you be rid of all of your credit card debt faster than you may expect.
Pick up the phone and give us a call. Let us show you how to get started on the path to being debt free.