Eliminating credit card debt is a top concern among millions of consumers. However, many people fail to outline a realistic strategy for reducing debts. There are many approaches that will put you on the path toward becoming debt free. Each person must assess his or her own situation and create a plan. Here are three tips to help you become debt free within a few years.

Recognize the Problem and Alter Spending Habits

Before you can take the necessary steps to reduce and eliminate credit card debt, you must first acknowledge excessive spending and resolve to change your lifestyle. Unfortunately, many people choose to live beyond their means. Furthermore, many acquire excessive debts because of trying to keep up with the joneses.

Credit cards serve a valuable purpose. They are great during emergencies and when you are financially strapped. However, if you are charging more than you can afford to pay, this creates a huge problem. As you endeavor to eliminate debts, be determined to stop using credit cards. Do not cancel credit accounts. However, you may consider cutting your cards or storing them away.

Pay Double, or Triple the Minimum Payment

If you are hoping to reduce credit card debts, you must be willing to pay more than the asking minimum payment. In fact, paying only the minimum will make it practically impossible to become debt free. Instead, attempt to double, even triple your monthly payments. If possible, make a large payment toward reducing your balance. This method is most effective.

Obtaining a lump sum of money is challenging. You may choose to use a tax return or bonus money received from work. Getting a part-time job may also provide you with the extra cash. If you own a home, take advantage of your homes equity. Home equity loans or cash-out refinancing generally present homeowners with enough cash to payoff high interest credit cards and other debts.

Use a Debt Management Company

If you need assistance with managing large debts, think about contacting a debt management agency. Trained debt management specialists will review your credit and outline a plan for reducing debts. Furthermore, the company will contact creditors and negotiate a lower interest rate. By doing so, a larger portion of your monthly payments will go toward knocking down the principle balance. Thus, helping you achieve your ultimate goal of eliminating credit card debt.

Students should be aware of the fact that credit cards geared towards students often come with high interest rates and many unfavorable terms. This is largely due to high default rates among students than among other age groups. Another reason for the high rates is that students usually have limited credit histories. A point to note for the students is that the credit card should not be considered as a source of income. Even though students have good intentions of paying off their bills in a timely manner after they enter the workforce, such intentions are never realized. Most often, students lack money managing skills which hit them hard when they use their cards to the maximum limit.

Some of the credit cards issuers do not require parental approval for issuing credit cards to students. This leads to further mismanagement of money by the students as they are given access to a credit card with pretty high credit limits, which they assume to be their money and spend on various things. Instead, the use of cash is advisable, whenever possible. Debit cards are good alternatives for college students. They allow retailers to deduct the money from the purchasers bank account immediately. They work at ATMs too, if the student requires cash.

Thus, try not to take up a credit card in the first place, and if you do take one, try to clear the bills within the payment due date. Because, if you dont, you could be fighting your way out of debt longer than getting your way through school.

The overwhelming problem with societys current mentality is that for some strange reason we think we can buy things that we really cannot afford. This is a major mistake on our parts. Its high time that we changed our foolhardy attitudes. Its time to get the help we need with credit card debt and simply stop spending what we dont have.

So, you need help in dealing with that niggling and worrying credit card debt? Thats not a problem. You are not the first or the last person to be in this self-inflicted mess. We have all done this. We get our first credit card and assure ourselves that we will never need to use it, except maybe for emergencies. However, that didn’t happen, did it? I was in college once, had the same attitude, and started using mine on a regular basis. I strongly imagine that this seems quite a familiar situation to you. You like myself thought it wouldn’t be a problem. We could add that bill or quick purchase to our credit card and everything would miraculously not suffer as a result. Yes, the debt incurred would be in the thousands, but soon we would have that well paid career and could clear the debt right away. Right? I guess we were all wrong because the reality is that life doesn’t always work the way we planned it. Before I knew it I was in the same position as you, in dire need of credit card debt assistance. Yes, I got that career, but not in the time frame I had hoped for.

Thankfully, finding credit card debt assistance is as easy as accessing your computer and the Internet. Start by searching for credit card debt consolidation and debt management. It is possible to stop struggling making ends meet and enjoy lower monthly payments. This is one of the best ways to avoid bankruptcy.

Credit cards make it very easy to live in a society that promotes buy now and pay later. The are often misused as people have the means to be able to buy various items they dont really need. If this is a common practice in any household, the amount of credit card debt can quickly result in a disastrous situation on regards to credit.

While credit cards are very convenient to use they should be something you rely on for emergencies only. It is acceptable to use a credit card for all of your purchases throughout the month as long as you are disciplined about paying it off in full. The problem comes when the charges keep being incurred but the balances arent being taken care of. This can create a false sense of security that will cause financial problems for you if you dont take care of it right away.

The number of people that have turned to bankruptcy as a way to take care of their credit card debt has continued to rise in recent years. This shows that it is much easier to obtain credit you really shouldnt have than it is to pay it all back. Think about the amount of interest you have to pay on credit cards while you carry a balance on them. If you are borrowing money from one credit card to pay the minimum due on another you are already on a road to financial destruction.

You can make changes to your spending habits though and do all you can to recover from it. It is important to only rely on credit cards as a way to pay for emergencies you cant cover from your monthly budget. Dont get into a habit of relying on them for regular use or they become a crutch instead of a resource. Poor money management skills and living beyond your means often results in over use of credit cards so pay attention to where your money is going.

The higher interest rates you have on a credit card, the more in debt you are going to become. It can be very depressing to realize that $100 payment you sent to the credit card company mostly went to pay the interest and your overall balance has barely changed. This can lead many people to stress over their credit card debt and think they have no way out of this dark hole. Yet there are some ways you can take an active stand and start wiping out the debt you have accumulated along the way.

You may want to contact the credit card company to see if you can lower your interest rate. There is also the possibility of consolidating those credit cards into one payment with a lower interest rate than the average of your individual cards. During this process you need to not use the credit cards to add up more charges though. If you do, you will have those bills to take care of again as well as the bill for the consolidation of what you already owed.

Make sure you look into the alternatives you have to get your credit card balances under control before you rush out to file bankruptcy. This is a black mark that will remain on your credit history for a very long time. It can make it almost impossible to get any type of loan or future funds when you really need them. The funds you can access will likely be at very high interest rates which further compounds the cycle of financial troubles. If you have several credit cards, cut up all but one that offers a low interest rate. Put it in a safe place and only access it when you have to.

Look for ways to earn extra money so you can pay more on the credit card and lower the balance due. You may have to take a second job for a while or cut back on household luxuries in order to accomplish this. It can be a very hard less to learn when your credit cards get out of control. Still, with plenty of discipline and a plan in place you can recover from it without ruining your credit.

Work hard to maintain a reasonable household budget, track your spending habits, and take responsibility for your own financial situation. Dont apply for all those credit cards as they will only be a temptation to buy things you want or to go on trips. The quality of your credit affects many aspects of your life so fight as hard as you can to keep it on track.

Fewer Cards

Your first goal in reducing your credit card debt is to avoid accumulating more debt while you work on paying the current debt off. After all, what good does it do you to pay $200 toward your credit card and then use it to make another $200 purchase. A good way to avoid using your cards is to get rid off most of them. If you have a current balance owed on the card and it isnt feasible to transfer the debt to an account with a lower interest rate, simply cut up the cards to avoid using them again. Close the credit card account as soon as you have paid it off.

Your ultimate goal will be to only have one or two credit cards for online purchases and emergencies. You will only be using it for non-emergency purchases that you know you can pay off within 30 days.

Freeze Your Assets

Most of us like to keep at least one or two credit cards around for emergencies. The problem is we end up using the cards to buy a new pair of shoes, take our spouse out to dinner or buy that new TV we really want. If you are prone to these types of impulse buys on the credit card, try freezing them.

Yes, I am serious. Take a gallon sized Ziploc bag, drop your credit card in it and fill the bag with water. Stick the bag in the freezer. Within a few hours your credit card will be encased in a block of ice, making it less convenient to just grab it and buy something. At the same time you know you can thaw it out in a few hours if you really need it.

No More Impulse Buys

How many times to you go to the store with a particular item in mind and end up buying a few extra things you didnt even know you couldnt live without? Im taking about impulse buys.

We go to the grocery store and are presented with all sorts of special deals and easy grab-and-go offers at the end of isles and at the cash register. We go to the mall to buy a white sweater and end up with a pair of earrings or new boots as well.

Storeowners have figured out exactly how to push our buying buttons and get us to purchase items on impulse that they know they couldnt sell us if we took a moment to think about it.

Before you make a purchase, take a moment and consider if you really need this now. For larger purchases sleep over it. Youll be surprised how many deals dont look quite as good anymore the next morning.

$20 Is All It Takes

Weve talked at length about how to cut down on spending and using your credit card, now its time to start paying off the debt you currently have. All it takes is $20 to get you started. Of course if you can come up with an extra $100 or even more, go for it.
At the very least I want you to come up with an extra $20 a month and add it to what you are currently paying toward paying off your credit card. Start with the card that has the highest interest rate. If you are currently paying about $100 a month toward that card, increase it to $120 until the card is paid off. Then use those $120 a month and add them to what you are currently paying toward your next card. Can you see how quickly this can add up and get you out of debt especially once you have the first card paid off? By consistently doing this you can be out of credit card debt for good in a few years.

Reducing your credit card debt is not easy, and requires planning and discipline. We all know that it is much easier to pull out that plastic than to pay cash for something. Credit card balances therefore escalate quickly since it doesn’t even feel like we are spending. The high interest rates on credit cards just make the balances go up even faster.

The answer to reducing credit card debt is to reduce credit card spending. But this is easier said than done. If you have the credit card in your pocket, you will be tempted to use it. The best solution is simply to destroy all of your credit cards except one. You save that one for use in case of emergencies. Cut up all the credit cards except the one with the lowest interest rate.

Another solution would be to take advantage of a zero percent credit card offer to do a balance transfer of all of your credit card debt. These offers come in the mail from time to time, so watch for them. The advantage of this is that 100% of your payments are reducing your debt, not paying interest. The zero percent will only apply during the introductory period, and what the credit card company making the offer is hoping for is that you will still have a balance at the end of that period that they will earn their interest on.

But for you, the credit card holder, the best way to manage this is to dovetail one zero balance offer onto another. Have the application filled out on a new one so that as the old one finishes its introductory period, you are ready to transfer that balance onto the new one, and on and on until the entire balance is paid off. If this is not possible, try to pay as much as you can during the introductory period so you end up with a smaller balance instead of a larger one due to interest accumulation.

If you do not receive a zero percent interest rate offer, look around for the cheapest offer you can. As long as it is lower than the interest rates you are currently paying, you will save money and be able to pay off your debt faster. Your goal should be to reduce your interest rate so that part of your monthly payment is paying off balances instead of just interest. Otherwise, you will never get rid of credit card debt.

Another excellent idea is to have your bank make automatic payments to your credit card bill. Your payment will always be on time, avoiding late charges, and you will start to reduce the credit card debt.

You can also consider a debt consolidation loan. The main advantages of a debt consolidation loan is that it is at a lower interest rate than your credit card debt, and that you only have to pay one lump sum instead of several smaller payments that add up to a larger total sum. This makes keeping track of your bills easier, and it will get all those collection agencies off your back.

Credit card debt can mount up quickly and can soon become overwhelming. And in addition to the debt itself, if you get behind the late fees and over limit fees can make this situation much worse.

One way to get a handle on credit card debt is to opt for weekly payments. In this way you will pay off every week what you have charged on the card, and this can be much more manageable than waiting until the end of the month when the balance is much higher. Paying weekly can also help reduce the amount in interest you are being charged.

If you really cant get a handle on your credit card debt any other way, you can always turn to the Consumer Counseling Center of America. This is a non-profit organization that can help you if find yourself in serious financial trouble. They can provide you with credit counselors who can go over youre your debts and income and help you develop a repayment plan. CCCA will also negotiate with your creditors and can often help to lower interest rates and late payments. Working with debt counselor will often keep your creditors from harassing you on a daily basis.

Another important step in succeeding with credit card debt counseling is to stop using your credit cards. The easiest way to do this is to cancel all your credit cards except for one, and this one should be used only in emergencies. No credit card debt counseling plan will be effective if you continue to use your credit cards. You have to completely stop using them and pay off the balances. This will require self-discipline on your part but is a vital step.

If you can, you should also consider transferring your credit card balances to the credit card with the lowest interest rate, and then canceling the higher rate cards. Some credit cards offer a limited time no-interest period which can also be useful in paying off your credit card debt.

When looking for a credit card debt counselor, be wary of groups claiming that they can cancel all your credit card debt and repair your credit for a fee. These are very often not legitimate organizations and have conned many consumers out of their hard-earned money when they were trying to get debt relief. Do your research and find out about these groups before agreeing to do business with them.

At the end of the day, it is you who are responsible for your credit card debt. Develop a budget for yourself and be diligent with your repayments, and soon you will be debt-free and enjoying your hard-earned money.

Debt reduction, a lofty goal, is also extremely difficult to carry out. As long as swiping your card feels easier than paying cash, youll find yourself stuck in a downward spiral of credit card debt. Continued use combined with high interest charges means your credit card debt will just keep growing over time. A good offense is the best defense; stop the cycle now and take steps to free yourself of consumer credit card debt.

Here are some credit repair tips that can help you dig out from under a mound of debt:

• The first, most important step- reduce your spending. Before you embark on a plan to pay off your debt, you have to commit to not accumulating any more. Get rid of all but one credit card; keep this card for use in emergencies only. Make sure the card you keep has a low credit limit and a low interest rate.
• Transfer your existing balances onto a card that offers a limited-time 0% interest rate on balance transfers. During that period, maximize your payments; your money is going entirely to pay down the principle because there is no interest accumulating. You can transfer your balance more than once if necessary; jut watch the mail for offers from your credit card companies. If you dont have a card that offers a 0% rate, then transfer your balances onto the card with the lowest rate. Reducing your interest even slightly can have a dramatic effect on your balance; the more you owe, the more this transfer will save you money.
• Set up an automatic payment with your bank. Automatic payments ensure your payment is made in full and on time every month, which will help you with your credit repair. Some credit cards will agree to lower your interest rate if you are making automatic payments so talk to your customer service associate to see if you can negotiate.
• Consider a debt consolidation loan. By consolidating your debt, you can reduce your monthly payments and cut your interest payments. These loans usually charge with a much lower interest rate than do your credit cards so you will save money in the long term. Because you will only have one bill a month to pay, you are much less likely to send it in late or to forget to send it.
]]> http://www.easyfinancialbliss.com/creditcarddebt/reducing-your-credit-card-debt-one-day-at-a-time/feed/ 0 http://www.easyfinancialbliss.com/creditcarddebt/organize-credit-card-debt/ http://www.easyfinancialbliss.com/creditcarddebt/organize-credit-card-debt/#comments Tue, 08 Jun 2010 14:51:31 +0000 admin http://www.easyfinancialbliss.com/creditcarddebt/organize-credit-card-debt/ Word Count:Article Body:
If credit cards have become a way of life for you, it might be time to organize your credit cards. If you have a lot of credit card debt, you might even want to look at consolidating your cards to a lower rate card that will save you in interest charges. Be careful, done incorrectly, canceling and consolidating credit card debt can harm your credit.

Before you consolidate, first you need to recognize why you want to consolidate. Are you looking for lower interest rates? Do you need lower monthly payments? Do you simply need to stretch out the term of your loan? If you answer yes to one of the last two questions, you should beware.

If you really just want to get out of debt, you need to understand how you got into the mess. Then you can fix the mess. Simply solving the problem with debt consolidation often makes the problem worse. Too many people consolidate and then charge the cards back up again.

If you know that you need to reduce the number of credit cards you have open, start with determining how much credit you need. How do you use your cards?

If you have several department store and gas cards that you never use, you should go ahead and close them. You also shouldn’t need to pay a yearly fee for a credit card that earns you gifts, like cash back or frequent flier miles. Pay attention to whether you use the miles or not. You may find that what you are paying isn’t worth what you are receiving.

You really only need one or two credit cards. Ideally, you need one card that is only used in emergencies. There are several steps you can take to start consolidating your balances into fewer cards.

Start by paying off all of the low balance cards that you plan to cancel and then close the accounts. Then, transfer your remaining balances onto the card that has the best interest rate. You can’t use this card or the other cards until it is paid off.

Now you need to have one or two cards that have high enough balances to cover your charging needs. Make sure that they have the lowest interest rates you can find. These should be the only accounts you have open. IF you charge to them, make sure you pay off each balance in full every month.

When it comes to balance transfers, there are some questions you should definitely ask. Find out how long the transfer rate lasts. Sometimes you can be given a rate for balance transfers that only lasts a few months. Find out if the rate is just for balance transfers, or is it for transfers and new purchases?

You need to find out about the fees that apply. Is there an annual fee? Find out what the late fees and over-the-limit fees are. Some institutions will charge balance-transfer fees as high as 4%. The higher the balance, the higher the fee. Just add it up: 4% of $5,000 is $200!

Read through your credit card offers very carefully. A lot of information is hard to understand (and find). Some offers waive the fees for the “initial balance transfer” only. This could be your first transfer and not the additional ones.

Each additional balance transfer will be treated like a cash advance and charged cash advance fees, which are very expensive.

If you feel comfortable with the terms offered to you, fill out the balance transfer form carefully. Mistakes can mean that the transfer won’t go through. Keep making the minimum payment on your old card until you are absolutely sure that the balance transfer has been completed. This can take two to four weeks. You don’t want to try to lower your payments and still receive a late fee and penalty.

Even though the new card company will contact you when the transfer is complete, you still need to talk to your old card. Call and verify that there is no balance left on your account. Write down the representative, time, date and what is said every time you talk with a company over the phone.

Have your card company send you a billing statement with a zero balance stated on it. You may need this in order to clear up any mix-ups. Oh, don’t forget to close your old card, you don’t want to accidentally charge on it!

There are some situations that can occur when you are consolidating your credit cards. You don’t want to suffer because you are taking control of your credit. Manage your transfers well and you should avoid errors.

Don’t cancel a card that still has a balance. This causes your rate to shoot up, because they know that they have to get the most out of you now. Don’t even tell a card issuer that you are leaving until you have no balance. Many issuers will raise rates if you cancel with a balance remaining.

Pay all of your cards on time no matter what. It can take one late payment for your interest to go from 9% to 28%. Amazing, isn’t it?

Don’t start canceling all of your cards before you apply for a mortgage or car loan. This can make your chances of approval even lower. Credit scoring is based on many factors, including how much debt you have and how much you have available. If you have cards with no balance on them, it can raise your credit score.

You need to remember, even if you find better terms for your debt, it is still debt. You must be sure that you pay it off before you add to it. If you don’t, then it will never end.

Consolidation doesn’t offer you a new start, just a better path to paying off your debt. If you truly want to get rid of your debt, use consolidation as a way to put all of your debt in one payment. And get out the scissors.

]]> http://www.easyfinancialbliss.com/creditcarddebt/organize-credit-card-debt/feed/ 0 http://www.easyfinancialbliss.com/financetips/basic-financial-information-tips-part-i/ http://www.easyfinancialbliss.com/financetips/basic-financial-information-tips-part-i/#comments Wed, 05 May 2010 22:13:27 +0000 admin http://www.easyfinancialbliss.com/financetips/basic-financial-information-tips-part-i/ Savings. Pay yourself first. Start now stashing 10% of your income in an Emergency savings. Dont use it for anything but real emergencies. Keep a For Sure savings account for yearly expenses you know are coming and you can estimate (e.g. Christmas, insurance, taxes, etc.). Also have a Buy Stuff account. If you do, youll be able to avoid many financial disasters which will face you, and you can avoid borrowing money from high-rate lenders.

Borrowing. Dont borrow money unless you are willing and able to pay it back. Failure to pay debts on time causes severe financial, emotional, and family problems. Experts recommend you dont borrow for wants, only for needs, or for things that increase in value. Many lenders will loan you money you cant afford to pay back, especially high-rate lenders.

Co-signing. Dont co-sign on a loan unless you are willing and able to pay it back. Often, co-signers end up paying off loans they are unprepared for, and financial hardships follow. Numerous co-signors now have negative credit ratings because a primary borrower paid late. Many lenders do not notify the co-signor before reporting delinquencies or repossessions to the credit bureau.

Compare. Before you decide who to borrow from, compare! Find out who is offering the best deal at that time look for the loan with the lowest rate (APR).

APR. The Annual Percentage Rate (APR). It is the standard rate, so we may compare the cost of borrowing. It is the cost of credit expressed as a yearly rate. When you borrow, always beat 13% APR (consider 13 to be unlucky when it comes to borrowing). Some have been illegally stating other rates such as weekly or monthly rates. Compare APR to APR. If you pay your bills on time, and you arent over-extended, you can nearly always find loans or financing arrangements at rates lower than 13%. Beware though, because beating 13% does not always mean you are getting a good deal. For instance: the difference in total interest paid on an 11% versus an 8% 30-year, $100,000 mortgage loan is $64,283 (assuming all payments are made as agreed).

Consolidation Loans. A consolidation loan can result in great savings to borrowers if the new interest rate is significantly lower, and if you dont run-up debt similar to what was just consolidated. But beware, because consolidation loans usually result in substantially more money out of your pocket into the lenders. For instance, mortgage loans usually involve closing costs. They increase the total debt. Many refinances involve reducing the monthly payment, but increasing the length of payback, which substantially increases the total interest paid. Borrowers, who refinance unsecured debt (e.g. credit cards) into a home mortgage, also increase their risk of losing their homes. Also, remember to keep all of your payments current until the old debt is paid off. Too many people have damaged credit ratings, and are in bad financial condition because they counted on money which didnt come when they expected it. Expect delays when applying for loans, especially consolidation loans. Dont spend money before you get it.

Desperation. Dont get desperate for money. The more desperate you are, the less likely you are to get a good loan.

Auto insurance. Keep your auto insurance current. If you fail to keep your insurance up-to-date, you could end up making loan payments for years after your car has been totaled.

Establish good credit. To avoid bad credit, don’t borrow too much, and do pay your bills on time. Inexpensive ways to establish good credit: (1) Obtain a good credit card. When you charge things, pay off the balance each month on time and pay no interest. (2) Establish a revolving line of credit (an empty loan) as an overdraft protection against bounced checks, and dont use it as a loan. (3) Get a loan to buy a car, or furniture, or etc.) and pay it off within a few months.

Late fees. To avoid late fees (which multiply the cost of borrowing), pay early, or at least on time.

Repossessions. To avoid repossessions and associated fees, pay early or on time, and keep your insurance current.

Extra principal less interest. To pay less interest on loans, pay more than the minimum required payment. Even small amounts of extra principal, can significantly reduce the total amount of interest you would otherwise pay over the life of the loan. Before doing this, however, make sure your lender accepts extra principal payments, and find out what particular procedure you need to follow to ensure your extra principal is properly applied.

Bi-weekly payments. If you get paid weekly, or every other week, paying bi-weekly is a very convenient (almost painless) way to reduce your loan term and interest. For instance, if you make of your required monthly payment every 14 days (a bi-weekly period), you pay the equivalent of 13.052 payments in an average year. If you dont get paid bi-weekly, or if your lender doesnt like biweekly payments, you can pay the equivalent amount in monthly installments. If you pay 1/12 of the sum of 13.05 payments each month, you will match the bi-weekly advantage (minor rounding differences).

Contrary to popular belief, the frequency of paying payments bi-weekly doesnt accomplish much, the real advantage is paying the extra principal (13.05 payments, or more, each year) which reduces the term and the interest paid. If you are considering signing up for a bi-weekly program, pay close attention to the cost. Some servicers have large set-up fees and transaction fees. Also consider the credibility of any company handling your money, some have diverted payments into their own pockets, leaving borrowers to make payments twice (once to a corrupt servicer, and a second time directly to the lender).

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