Getting out of credit card debt can always be tough. When people consider how to get out of debt, it is important to have the determination and the will to see it through. The fact is that it is never easy to clear any kind of debt, especially credit card debt. This is primarily due to the fact that a person's expenses will not stop for a period of time. Even while debt clearing is being attempted, other spending will occur. Balancing out spending with debt clearance is the best way to wipe clean all credit cards and start a fresh.
Here is a step by step guide for how to get out of credit card debt:
1. Make a list of all credit cards and look at the amounts on each. At times, people will have so many credit cards that they cannot keep track of which ones they have a certain amount of money on. By making this list, it is easier to start paying them off one by one.
2. DO NOT simply look at credit card limits and attempt to get clear of those. While it is good to have debt that is a few hundred dollars less than the credit card's limit, it is better to be as close to $0 of credit card debt. That is the ultimate goal, not simply getting clear of the limit and then beginning another spending spree.
3. Talk to banks. There may be trouble in keeping up with monthly payments at times, so talk to the bank and tell them what the situation is. They will be considerate for a period, which will help give a person breathing space to clear their debt slowly. Do not avoid credit card companies or debt collectors, as that makes it worse.
4. Change attitudes towards money. There is always a reason people incur a lot of credit card debt. While there are extreme cases of illness or emergency spending, in the majority of cases it is due to spending more money than a person is earning over a period of time. Living within income is the best way to clear credit card debt. The change in lifestyle will free up money that can clear debt and it will pave the way for a life of managing credit card issues.
5. If there are cards that simply cannot be cleared within a person's budget, then it is time to talk to debt collectors. Typically, they will provide a financial offer to settle the debt. This might be 30% to 50% of the original debt incurred. While it will hurt the person's credit rating, it is a good way to make a clean break from debt on a particular card.
6. In order to get out of debt, a person has to create a payment plan that will provide a clear path towards the ultimate goal: no credit card debt. This begins by looking at earnings and expenses and finding places to cut. This ties in with point four about changing the outlook towards money.
Combine that with a structured approach of saving x amounts of money each month. That money can go towards paying back debt and as a result a clear time table will be formed. Follow that schedule and debt will be cleared sooner rather than later. For example, if $200 is saved each month that can go a long way to clearing debt. In just a year, $200 saved a month can clear $1400 of credit card debt.
7. DO NOT get any additional credit cards. Too many people make the mistake of getting cards on 0% APR and then trying to clear the debt on their other cards this way. It may seem enticing but it is just going to create a hopeless situation of debt. Saving money is the only way to properly clear debt, not applying for more cards.
Credit card debt is a dangerous thing, as it can easily spiral out of control. Reevaluating life decisions and spending habits is the only way to truly break the cycle. That way, money is saved and it can be used to get a person back to the level of having no debt. That is the goal and with patience, diligence, and good bookkeeping it is achievable. Anyone can break free from credit card debt, should they choose to try.
By Andre Bradley