Credit Card Debt...It seems like almost everyone has some or way too much! So, what can you do about eliminating your credit card debt? Here are several tips:
If you haven't done so, you should take a close look at your statement. Check out the area where the company tries to explain how much of your payment is applied to interest, principal and/or late or over-limit-fees.
It's not going to take you long to realize that if you only make the minimum payment required, you may by paying on this credit card for many, many years!
In addition, you could end up paying 3-4 times as much as you originally charged!!!!
So what is the best way to pay off or eliminate your credit card debt?
Well, it depends....
Many people (maybe just like you) have become over-extended with their credit card total debt to the point where just making the minimum payments is hard.
I'm going to share a secret that could help you completely eliminate all of your credit card debt in say...4 -5 years instead of 15- 20 years!
But, it's going to take a little sacrifice on your part.
You are going to start by taking an honest look at yourself and your budget. In other words, you are going to write down everything you are spending money on besides the basic necessities and see if you can find a hundred dollars or so to put toward becoming DEBT FREE!
Of course, I bet you are thinking..."Is this guy nuts! I don't have any extra money!"
Let's take a look:
If you are like a zillion other people and stop to get your favorite coffee drink daily (or sometimes twice a day), you are most likely spending $4 -$5 dollars per drink.
If you do that for an average of 30 days each month, using just the $4 drink, that is at least $120 each month!
What about that cable/internet service bill you pay monthly?
Do you really need a couple of hundred channels? What if by taking a close look at your viewing habits you could save, oh, say $25 each month on your cable/internet bill?
Do you have to eat out for lunch each day? Most people not only don't have to "eat out", but could stand to make a more healthy choice lunch they could bring from home. Not only could you save $40-$50 each month, you may even eat better and feel better, etc.
You get the idea? Just a little here and there adds up!
So let's say you can find at least an extra $100 each month. Now what?
You are going to list all of your credit card accounts and how much the minimum payment is for each.
At this point, you are not going to worry about the interest rates (unless, you have gotten yourself into one of those so-called "pay-day loans" and are paying 30% or more!) If that's the case, you'd start with that one.
But for this example, let's start with an account that has a balance of $1,000 and the minimum payment is $25.
You are going to add the $100 you saved (by making a few life-style changes) and add that to the $25 minimum for a total of $125. And you are going to make all of the other minimum payments (ON TIME) as well.
This account should be paid off in 8-9 months or so.
Let's say your second account has a balance of $2,500 and you are required to make a minimum payment of $65. Now that that first account is paid off (feels good, huh?), you are going to take the $125, add it to the $65 for a total payment of $190.
At $190/month, that second account should be paid off in about 14 months or so. And yes, you are going to keep making the normal required minimum payments on the other accounts.
STARTING TO GET THE IDEA?
Before long, you are going to be increasing your monthly payment on your credit card accounts and after just a few years, you are going to not only be DEBT FREE, but now you have an extra $300, $400, $500 or more for your budget!
We have helped many clients with this type of DEBT ACCELERATION PLAN.
Of course, the Debt Accelerator Plan is great if you not only can afford to the minimum payments required, but also can find some extra money to help "accelerate" paying off those credit cards.
If you are like millions of people who for several reasons beyond their control, find themselves unable to keep up with the minimum payments required on their credit cards, you only have a couple of options:
- A DEBT SETTLEMENT PROGRAM
- BANKRUPTCY
Let's leave the bankruptcy option for the very last as I believe you want to not only eliminate your credit card debt, but would also like to avoid bankruptcy and all fallout it brings.
What is DEBT SETTLEMENT?
Once an account has become delinquent and most likely charged off by the original creditor, it will show up with a debt collector.
These debt collectors may have taken the account on an assignment from the original creditor or they may have purchased this debt.
Either way, the debt collector is going to try and get you to pay as much as possible.
If you have ever had a debt collector call you, you know it is not usually a pleasant experience!
I have written numerous articles and blogs about how to deal with debt collectors and you really owe it to yourself to find out what your rights are under the Fair Debt Collection Practices Act or FDCPA.
Here's a link you should check out:
Debt Collectors, the FDCPA and Your Rights
If a debt collector cannot get you to pay 100% of the debt they claim you owe, they may be willing to accept a reduced amount called a SETTLEMENT to satisfy this debt.
Above, I used the phrase " the debt they claim you owe". If you feel that you honestly DO NOT OWE THE DEBT they are claiming you owe, you can make the VALIDATE THE DEBT.
Usually, when you receive a letter/statement from the debt collector, it will state something like, "unless you dispute the validity of this debt within 30 days, it will be deemed valid....".
There are many so-called "CREDIT REPAIR" scam companies that try to challenge every legitimate debt you owe in an attempt to have it removed from your credit report and thus, improve your credit score.
Now while I am certainly in favor of challenging errors on a credit report, I do not believe in FRAUD and/or misuse of the system to get out of paying or negotiating a settlement on a legitimate debt you owe.
But, if you truly know and CAN PROVE that you do not owe the debt the debt collector is claiming, click below:
OK, enough of that...
What about Debt Settlement?
Debt Settlement is where a negotiation takes place between you or a representative from a debt settlement company whereby the debt collector (or in some cases the original creditor) agrees to accept less than the full amount due.
How much of a reduction depends on several factors, such as:
- Are you employed?
- Retired?
- Renting?
- Have any extra funds to tap?
To get an idea of how a SETTLEMENT AGREEMENT actually looks, click below:
If you find yourself not even able to offer monthly payments in a settlement agreement or are facing wage garnishment and/or bank levy due to a judgment awarded the creditor, then you may be forced to seek BANKRUPTCY PROTECTION!
As I stated earlier, I believe bankruptcy should be your last option after you have attempted
to pay off and/or settle your credit card or other unsecured accounts through the methods
I've just outline
STILL CONFUSED?
We can help...
