Tips, News and Advice from Credit Card Assist

All-In-One Guide To Seriously Reducing Your Debt

by on January 21, 2011

Debt has been plaguing American credit card holders for decades and since recent high interest rates and changes in the fee structures of many credit card providers have driven some people over the edge. Combine all that with the high rates of unemployment and a true credit crisis was upon us. In recent years, things got really bad for consumers. Now, there is legislation getting passed to help the consumer and protect them more from unfair credit card practices.

Since changes are being put in place, more consumers find there is less of a stigma associated with credit card debt burdens. They are turning to professional credit counselors for help and are more committed to facing debt head-on. Some consumers are also taking the bold steps of negotiating debt settlements on their own directly with their creditors. However the work gets done, the point is debt needs to be dealt with. It is one thing in life that will not go away as more time passes. It will only get worse.

So here at CreditCardAssist.com, we want you to make the right choices about your credit and personal finances.  Choosing the right credit card for your circumstances is important, but avoiding a huge debt load is certainly another important point that cannot be emphasized enough.  We have provided an all-in-one guide to seriously reducing your debt burden from start to finish. While it might not be easy to reduce your debt, it certainly is simple to understand how to do it.

There are some insane stories about how much debt people have gotten themselves into by using plastic. In one story found around the Internet a married couple went for credit counseling with just a few grand in debt. Lo and behold during the course of the meeting, the husband pulled out nearly $90,000 worth of credit card debts he had kept hidden from his wife. Not only did the couple face the burdens of debt, they had to pay even more money for marriage counseling services. The moral of this story is that couples need to be open and honest about money problems if they wish to get out from under debt.

Debt-Free Options

To recover from debt these days, you have many more options than in years past. You need to explore all the options to decide which best suits your needs, your budget, and your commitment capabilities. Here are some examples of what consumers are doing to free themselves of the burden of credit card debt:

Self-Budgeting

Some consumers are using the free method for debt relief with the do-it-yourself approach. Budgeting is the first element of becoming debt-free. You need to establish a family budget based on income and expenses. Track your spending for a month or more than go back to your budget to see where you can cut costs. Allocate a consistent amount of money towards your debts and then contact your creditors directly to see if they will agree to accept what you can pay each week, bi-weekly, or monthly. If they agree, keep up with payments. If they disagree, seek professional assistance.

Transfer Balances

Lower interest rates on your debt burden, whatever it might be, can be a valuable tool in your debt reducing efforts. With a 0% balance transfer card, you can bring all outstanding credit card balances from existing cards over to the new card as long as the total amount is within the credit limit of the new card. Low or no interest credit cards offer much lower interest charges than your other cards for a certain period of time. This allows cardholders interest free payments for 6-12 months. This solution will only be effective if you have a plan to pay off the full balance before the promotional period ends.

Personal Loan

If you haven’t gone completely backwards in your financial obligations, you may have a credit score that is still decent enough to net you a personal loan through a bank or credit union. A loan for the total amount of credit card debts you have outstanding would allow you to consolidate your multiple debt payments into one more manageable payment each month.

Credit Counseling

Usually non-profit agencies will offer free or at least low-cost resources for you to get your situation under control. You bring your debts, expenses, and income statements to an appointment and a professional counselor will run the number and help you decide what the best alternative would be for paying off your debts.

Debt Settlement

Debt settlement companies will contact your creditors directly and negotiate a new payment plan. Many agencies with a reputable background have built relationships with creditors and can also help stop or at least lower interest rate and have fees waived. Their capabilities will depend on the agency but a good debt settlement company will be able to make payments more reasonable and pay off more achievable. There are usually fees for these services done on a monthly basis. Some agencies will calculate those fees based on the total amount of debt you bring to the table.

What debt relief primarily comes down to the fact consumers need to find the money they need to pay off debts. Here are some additional ways to reduce your debt:

Stop Spending – it may seem like an obvious step to take but without a proper plan in place for getting rid of credit card debt, you are likely to continue to spend on credit making your payoff efforts completely pointless. Never close your credit card accounts, especially the accounts you have had for the longest period of time. Instead, put the cards in a safe location and resist the temptation at the store to use them. The faster you stop spending money on things you can’t afford the faster you can take care of your debts.

Second Job -When paying credit card debts is harder than you can reasonably manage, it may be time to take on a second job and dedicate all income towards your credit card debts. A part time job is not a feasible option for everyone but it should strongly be considered. The reward at the end of the road is your freedom from credit card debt and the ability to ditch the second job as soon as you achieve your goal. Even odd jobs can bring you needed profits and perhaps the inspiration to start a new business.

New Job – If you are not making ends meet with your present income and do not have the flexibility to take on a second job, consider either asking your present employer for a sizeable raise if you can prove you deserve one or start looking elsewhere for a better paying job. For some who are stuck in the same routine, they often fail to research how much they should be getting paid for jobs in their specific location. Check out the local Department of Labor salary uidelines for your area to see if you are getting paid adequately.

Yard Sale/eBay – There are probably a ton of items in your own home that could net you some much needed cash if only you did something with it. Since more people are bargain hunting these days, try getting rid of clutter and things you don’t need nor use by hosting a yard sale or using online sales sites like eBay and Craigslist. The money you make from these decluttering activities should be put towards your goal of becoming debt free.

These days there is little excuse for handling your debts head-on because there are so many more options for settling debts once and for all. Creditors are also more inclined to work with you because they need to get back their money with so many defaults occurring over the last few years.

Have you found your way out of debt? If so, what is your story? Have you done anything innovative or creative for getting credit card debt off your back? Let us know how you handled the weight of credit card debt. We love hearing from you.

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