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January 18th, 2010

Credit Card Debt? 5 Tips for Escaping

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Your debts are piling up, and you’re having problems making minimum payments on time. Those banks, those credit card companies…if only they hadn’t raised your rates. If only they hadn’t added a late charge to your balance. If only…

Moneywatch blogger Ray Martin points out that some consumers fail to assume responsibility for overspending on credit cards. Carrying revolving balances incurs interest charges, and once you approach your credit limits, credit card debt can lead to additional fees and/or increases in your interest rates. Although an estimated 60% of personal bankruptcies are allegedly caused by health care expenses, that leaves 40% that may result from overspending. Here are some steps for gaining control of your spending and getting the help you need to return to financial sanity.

  • Accept responsibility for your debt and spending: Taking ownership of your debt and resulting problems puts you in the driver’s seat. Set goals for becoming debt free, and make a plan. Tracking progress is a great incentive for sticking with your plan.
  • Stop using credit cards: If you’re carrying balances on your credit cards, it’s costing money. In the current economic climate, credit card companies are less willing to accept exposure to risk. Customers who carry high balances or make late payments can find their interest rates climbing. High interest rates and fees increase your debt and make it difficult to reduce your balances.
  • Put your cards away: Don’t carry credit cards and keep them away from your computer. Shopping online can be fun, but it can also lead to the same problems as making a date with your friends at the shopping mall. Get a debit card that displays a major credit card logo. These cards are accepted the same way as credit cards, but the funds come out of your bank account. This is typically enough to curtail most if not all impulsive purchases.
  • Establish and keep a cash based budget: Whipping out credit cards for weekend pizza, car repairs, and a trip to the veterinarian is OK if you’re paying off your credit card balances in full each month, but most of us don’t do that. Work out a cash based budget and pay cash or use your debit card; you don’t want to slow down paying off your credit card debt by adding more.
  • In too deep? Get help: If you can make it through the month without relying on credit cards for essential expenses, or if you’re skipping one payment to make another, it’s time to get debt help. Debt consolidation and credit counseling agencies offer affordable solutions for getting out of debt. If you owe several months’ payments, debt settlement can provide an alternative to filing bankruptcy.

Get started toward debt freedom today. Credit counselors can help evaluate your circumstances and recommend appropriate solutions fitting your situation.

Post written by Karen Lawson

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  • Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score. Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management. He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others. He can be contacted by visiting his personal site, GoodCreditLiving.com.

  • Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.

  • Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno.

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