November 10, 2009
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What To Do With Credit Card Debt, Pt.4
Congratulations!Congratulations! Your new awareness has moved you through the hardest stage of accepting that you have a problem. The best way to avoid getting further embedded in credit card debt is to cut the card up or put it away. Next, don't spend more than you can pay. A well thought out budget will help with this. Knowing what's left in the budge, will help you avoid buying those luxury items. Switch from credit card to debit or cash. When doing so, be aware of any fees that might accompany the use of debit cards and any consequences for over-draft. When making the final decision to buy, ask yourself if this is an item that you really need. Be honest. If you are in over your head with credit card debt, there are some things you really don't need.
Look for ways to adjust your monthly budget to find areas where you can cut expenses. Then, use it to bring your credit card payments up to date or to apply more toward paying off the balance. Build an emergency fund. If you have an emergency fund, you won't need to depend on a credit card when unexpected expenses pop up. Don't use credit to buy expensive items. Rather, budget a weekly allowance for luxury items or get yourself a “reward jar.” My reward jar is filled with quarters, dimes, and nickels. When the jar is full, I typically have about $300 to either store in savings, pay down debt, or purchase an item off my wish list. It's a great way to reward yourself for a job well done.
Take a close look at your credit card's reward programs. If you haven't taken advantage of those rewards within the past year, you are paying a higher interest rate and annual fee for something you will never benefit from. Switch to a lower interest rate card and put the money you save on interest toward paying down debt. Lastly, you may need to seek the assistance of credit counseling. When doing so, be sure to pick a reputable agency. Shop around before making a decision to solicit the services of any credit counseling agency. Remember, a reputable agency charges little or no fees. The National Foundation for Credit Counseling is the safest place to start. You can visit them at http://www.nfcc.org/ for more information.