Are you one of the many Americans with too much credit card debt? Don’t feel bad. You’re definitely not alone!
There are worse things in life than debt. But when you’re dealing with the stress of financial problems, and losing sleep, it is important to find a way to reduce the burden as quickly as possible.
Even if you’re struggling with financial problems, you need to keep it in perspective. Because YOU have the power – no matter how bad things seem right now – to take control of your finances, and start knocking off your debt one dollar at a time!
But how can you do it when money is really tight? And the bill collectors are calling (or will be very soon)!
No matter how much or how little debt you have, there are ways to get yourself back on track financially. Getting out of debt is not a race. And there are no secrets. It’s a process. And if it’s taken you several years to accumulate your debt, you won’t get out of debt overnight. But you can take action today and start making changes right away – changes that will get you on the right path, and make your future a lot brighter financially!
Each change you make – even if it only saves you a few dollars at the start – will start yielding bigger results over time (and give you peace of mind every night when you go to bed!)
That’s the power of compounding. Unfortunately, when you have too much debt that compounding works against you, and works in the banks favor. Now it’s time to reverse that trend.
So if you’re losing sleep over credit card debt, start following these 5 simple tips right away!
1) Write a list of all your credit cards, with the amounts you owe, interest rates, and monthly payments for each of them. You can’t develop a plan to get out of debt until you know exactly where you stand – even if it is a little painful. Pretending your financial problems are not that bad is a mistake. Knowing exactly how bad they really are is crucial!
2) Remove all but one credit card from your wallet or purse. When you have credit cards with you when you’re driving around or walking through the mall, it’s easy to use them, and spend money you just don’t have. So, pick one that you can use for emergencies. And remove all the rest - stick them in an envelope, then seal the envelope and put it in your dresser in a place you won’t see all the time. The less you see the cards, the less likely you are to use them!
3) Next, grab your most recent credit card statements and call all the creditors. Ask to speak with someone who can help you lower your interest rates or lower your monthly payments. Often, this one simple step can lower your interest rates 5-10% - and help you get out debt faster by paying off your balance quicker. If the first person you speak with says they can’t help you, POLITELY ask for a supervisor. And ask them for help. If they can’t help, thank them and wait a few weeks and call again.
4) Take your list from the first step and make a goal to pay off the card with the smallest balance first. Take as much extra money you can afford each month and add it to the minimum payment amount – even if it’s only $5 or $10 bucks! Some financial “experts” will tell you to pay off the one with the highest interest rate first. But you’ll see quicker results starting with the smallest balance, and get the motivation to keep going! Then once that first card is paid off, take the money you used from paying it off, add it to the second card, and pay of that one. Keep going until all the cards are paid off completely!
5) Once all your credit card bills are paid off, take the money you were using and open a savings or money market account, and put ALL the money you were using into the account each month. Then you can use this account instead of your credit cards to pay for the things you need to buy!
And don’t forget - when it’s time for bed, think of something fun or positive you did that day (force yourself to think of something other than debt, money, and work) and before long you’ll be sound asleep!
You won’t get out of debt overnight. But you can take small steps that you will pay off BIG over time. You’ll be surprised how quickly you start making progress paying off your debts, and start sleeping better!
Published: Thursday 15th January, 2009
