I found myself paging through a magazine in the doctor’s office recently and quickly realizing that I was looking at a magazine more than a decade old. This was evidenced by the large hair, odd fashions, and recipes without a drop of olive oil. As I enjoyed the trip through time, I saw an article on credit card debt relief. Considering the credit climate today versus the credit climate of the 1990′s, I assumed the methods and theories of debt reduction would be different. At least, that was what I was expecting to read.
I was surprised to see that credit card reduction advice hasn’t changed very much in the last decade or so. Certainly, the economy has changed significantly in that time, so shouldn’t our methods for credit card debt relief change, too?
The tenets of credit card debt relief remain the same for all these years because basic financial strategies never change. Don’t spend more than your take-home pay and save your surplus money. When credit cards became the norm for every day spending, all that changed. And, after some years, we are all suffering.
Debt relief tips didn’t get much notice in the 90′s, but I’m sure there are many people in today’s world that need solid advice for getting out from under their credit burden. We have become too dependent on personal credit cards over the years and now appreciate good, solid advice on how to reduce our debt.
If you and your family are looking for solid advice about how to get that credit card debt reduced, there are a few basic steps you need to take. Following are the simple, but crucial, steps to getting rid of that credit card burden, much like the advice given more than a decade ago:
1) Cut Up Your Credit Cards – Painful as this may be, it’s a crucial first step. Start by cutting up in-store credit cards and work your way up to your major credit cards, then stop. You want to keep one major credit card, meaning a Visa, Master Card, American Express, and the like, for the purpose of booking flights, hotel rooms, and for emergencies. Review your remaining major credit cards, determine which has the lowest interest rate, with no annual fee, and keep that one card. Now, cut up the remaining cards.
2) Crunch The Numbers – Now it’s time to do a family budget if you haven’t already done one. Without spending a lot of time on detail, simply take your net income each month, subtract the expenses that must be paid every month such as mortgage, rent, heat, lights, food, and clothing. What’s left is your disposable income; what you have to work with to pay off the credit card debt. This is information that you must have on hand in order to move on to the next step.
3) Time to Make the Dreaded Call – Calling the credit card company is the most feared but most critical step to reduce your credit card debt. Making minimum payments on your credit card each month won’t bring that balance down. The interest alone will continue to grow beyond your current balance owed. Pull out all your credit card statements, take a deep breath, and call customer service. Tell them that you are paying off the balance, but that you can only do so if they reduce the interest rate and reverse any late fees or overage charges. Most credit card companies will work out a payment plan for you. Be prepared to negotiate, be firm, and be persistent. The credit card company wants your money, so they will be willing to get it on your terms if that’s the only way possible.
4) You’re Going to Need to Sacrifice – Perhaps you’re expecting a tax refund, or a bonus, or some other “found money.” We all like to have a little extra money to spend, however, this time it’s different. Sorry to rain on your parade, but you have a goal of being debt-free and you have committed every penny to spending down your debt. Look at the interest each credit card company is charging you, even after negotiating a lower rate, and that money becomes more valuable than ever. Your found money is going to have a much bigger return if you use it to reduce that interest-laden debt.
5) Commit to Your Plan – Paying off your credit card debt this way doesn’t offer any instant gratification. It could take a year or more to see any real benefits. The commercials may tell you that you can be debt free in six months, but that is simply not true. It took you some amount of years to get into debt, it will take you some time to dig your way out. You may see some progress toward your debt-free future in about six months or so, but beware of celebrating too soon. You may feel like treating yourself to an expensive reward, but resist the urge. Just add up all the interest you’ve been paying over the last six months you’ll see that the credit card companies are still enjoying way too much of your money. Skip the splurges and stick to your plan so you’ll once again enjoy your own money.
6) Very Carefully Check Into Debt Consultants – Something that has changed since the 1990′s is the use of credit card debt consultants. Countless debt relief companies are vying for your business, offering to take you quickly and painlessly out of your debt struggle. Debt consultants must be considered and investigated very carefully as they often end up costing you more than if you set up a payment plan directly with your creditors. Interview any debt consultant you may want to hire in person. When you discuss your debt with them, did you feel you were being listened to and you got answers to the questions you asked, or did they just tell you everything was going to be “fine.” Be sure you know all the details including their percentage taken from your payment, any other fees involved. Talk with people you know and trust, as well as the Better Business Bureau. You could be worse off with a debt consultant than without one, so do your homework.
When it comes to debt, times really haven’t changed. Your parents and grandparents were right about how to handle money; don’t spend too much and put some away every month. Credit has been too soft and too available for much too long. Now, many of us find ourselves in a very difficult position. We can’t enjoy our lives if we are drowning in debt and unable to break free. These simple steps have worked for people through the years and can work for you, but only if you follow through all the way to the end…the end of your credit card debt. Then you can breathe deep and relax; finally free to enjoy your own money.
Nicole Dean is the mostly-sane mom and owner of ShowMomtheMoney.com – a fun and informative resource to help moms achieve success working from home. She invites you to learn more ways to save money in her Frugal Moms section. Be sure to sign up for her free lessons for work at home moms.
Recent Comments