Debt Management: Seven Steps

You're sick of ever-increasing fees and finance charges for carrying credit card debt. Here are seven tips for creating a debt management plan that can help you get and stay out of credit card debt.

• Develop a cash-based budget: Coming up short between paychecks can lead to serious credit card debt. Developing a cash-based budget helps you stop the cycle of bridging financial gaps with credit cards. If you can't meet all of your expenses without using credit cards, you'll need to find ways of increasing income or reducing expenses.
• Establish monthly spending limits for your credit cards: Don't charge more than you can afford to pay in full every month. Keep track of charges, and put the cards away when you've met your spending limit.
• Don't carry credit cards with you: Use a debit card instead. Carrying credit cards invites impulsive spending.

What if you're deep in credit card debt? Here are some tips for digging your way out.

Credit Card Debt: Up to Your...

Knees? Neck? Something else? Getting out of debt requires forming a debt management plan that includes budgeting and curtailing all use of credit cards until your balances are paid off. Here are some tips for getting started:

• Budget for savings each month: It's understandable to want to apply every available cent toward high cost credit card debt, but saving for emergencies assists in avoiding using credit for unplanned expenses.
• Pay off highest APR debt first: Make a list of your credit card accounts and the APR rate shown on each statement. This is the annual percentage you're paying for interest and fees. Pay the most toward your highest APR debt, while making minimum payments on your other debts. When the highest APR debt is repaid, roll that monthly payment to the next highest APR debt, and so on until your debts are paid.
• Ask for reduced interest rates: Ask your creditors for lower interest rates. The worst they can do is refuse. Don't close credit card accounts as this can negatively impact your credit report by reducing your credit lines.
• Get debt help: If you're facing a financial crisis, get debt help. Contact a professional financial advisor or credit counseling service.

Getting out of debt takes time, perseverance, and patience, but being debt free is worth the effort.

About the Author:
Karen Lawson started writing stories about birds and surfing at an early age. For more than ten years, she enjoyed a productive corporate career in mortgage banking before moving to Reno, Nevada in 1997. Karen earned BA and MA degrees in English (specializing in writing) at the University of Nevada. Significant areas of research and writing include truth and ethics in creative nonfiction, medical humanities, and the symbolism and lore of birds in American literature and culture. Karen has taught English at a community college, is writing a collection of poetry, and enjoys birdwatching and walking her basset hounds.