How To Eliminate Credit
Card Debt
Article by:
Noel Hynes
There is almost
nothing more troublesome than having too much debt
to pay each month. Consumers incur debt for
many different reasons. Sometimes illness, accidents,
or just bad luck can make it seem impossible to get
finances under control. Other times it is simply
because we spend more money than we earn. The first
step toward taking control of your financial
situation is to learn how to eliminate your credit
card debt.
Develop a budget.
Start by listing all sources of income. First list
fixed expenses such as mortgage payments, insurance
premiums, and auto loans. Next, list the expenses
that vary from month to month such as utility bills,
recreation and clothing. If there is any hope of
controlling your credit card debt you must create and
stick to a budget.
There are
different kinds of debts. Mortgages and auto
loans are debts secured by collateral. In the event
of default on a secured debt, a lender may foreclose
on your home or repossess your car. Unsecured debts
are loans with no collateral and often have variable
interest rates and are assessed a fee for late
payments. In the event of default on an unsecured
debt a lender may report to a credit-reporting
agency, contact the debtor repeatedly by mail or
telephone, and in general make life miserable for
those who find themselves in financial trouble.
If you are among
the millions who have found themselves in a financial
crisis, consider your options - budgeting, debt
consolidation, or bankruptcy. Which works best for
you? It depends on your level of self-discipline, how
much debt you have, and your future financial
prospects. While eliminating debt may seem next to
impossible, your life does not have to go from bad to
worse.
Self-help may be the
easiest, cheapest way to eliminate debt. First,
stop charging now. Incurring more debt will only
compound the problem. Make a list of all your credit
card bills starting with the smallest. Pay as much
above the minimum payment as you can afford on the
card with the lowest balance. Continue until this
debt is paid in full, and then proceed to the next
card. Systematically paying off your credit cards one
by one will reduce your debts dramatically. The
fastest way to eliminate credit card debt is to put
every penny you can towards paying off your credit
cards. Do not underestimate the effect an extra five
or ten dollars paid repeatedly over time can have on
eliminating debt.
You may be able to
reduce the amount of your combined monthly payments
and lower the interest rate by obtaining a home
equity line of credit or a second mortgage. Think
carefully before taking this route. Your home becomes
collateral with these loans. If you make late
payments or miss payments you could lose your home.
These types of loans may provide certain tax
advantages but the fees can really add up. The same
goes for debt consolidation. You eliminate or reduce
interest rates and the amount of your monthly
payments, but the length of the contract and the fees
can be more than your original debt.
As a last resort,
bankruptcy could be considered. A bankruptcy remains
on your credit report for 10 years, making it
difficult to obtain credit, get life insurance, or
buy a home. However, it can be a fresh start for
those who cannot otherwise satisfy their debts.
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About The Author
Noel Hynes is the
owner of http://1st-for-credit-cards.com. Easy online credit card
applications.
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