Eliminating Credit Card Debt - A Quick Guide

Eliminating credit card debt is one of the most important things you can do to get on the road to financial security. Newspapers might be telling us that the recession is over but many people are still struggling to get out from under a mountain of debt. Once it's gotten out of control it's not an easy thing to escape because the interest rates are so high they build up faster than you can pay them off. It can have a serious effect your ability to get ahead in life. If you're not working hard at getting out of debt then you should be.

To begin eliminating credit card debt you first need to get a handle on exactly what you owe. One of your first priorities should be to get a credit report from all three of the credit bureaus. You're probably getting some statements in the mail, but if things have gotten bad then chances are you've got unpaid bills that you've completely lost track of. You may discover bills you've missed or even some mistakes that you shouldn't be charged for at all. You can't pay something off if you don't even know that it exists.

Balancing your budget should be the next task to focus on. Eliminating credit card debt is impossible if you're still spending more than you're taking in. You'll need to look at where you're money is going and will probably need to increase your income if you want to maintain your present lifestyle. If you can't find a way to make more money then you will have to cut back on anything that is not a basic necessity. Even things like cable TV aren't really needed to survive and may need to get the axe. If you're serious about eliminating credit card debt then sacrifices will have to be made.

Only after you've accomplished the difficult task of balancing your budget can you actually proceed to pay off your debt. Many people find the following simple plan of action to work quite well.

Tally up your bills and then put them in order starting from lowest total amount owed and ending with the highest. This will not necessarily be the same as your minimum monthly payments. Then, each month, make the minimum payments on all the cards except for the first one with the smallest amount owed. Pay as much as you can every month on this one until it's paid off.

When you manage to get the first one out of the way then concentrate on the next largest bill until you're finally debt free. This may take a very long time and will require hard work on your part but it will be incredibly satisfying when you succeed.

Eliminating Credit Card Debt Through Consolidation

Another excellent option to consider for eliminating credit card debt is to consolidate your bills. The internet is full of various offers for debt consolidation loans. However, you have to be very careful because many companies are just trying to take advantage of desperate people.

A lot of folks don't realize it, but a safer and less expensive method may be to do it yourself. It is possible to consolidate your debt on your own although it's not something that's widely advertised. A lot of companies don't want you to know because they won't make any money that way.

When you consolidate your debt the goal is to merge it into one payment that has a lower interest rate. The credit reports we spoke of earlier will once again be necessary to figure out where you stand. You'll need to get your bills in order and find the contact information for all the companies that are owed money.

You'll then want to inform them in writing that you don't want to go into default and ask them if they're willing to make a deal and lower your debts. Creditors will usually negotiate because they realize that if they don't, then they may not get anything at all. Once you've worked out a deal, the next step is to find a loan to pay them all off at once.

Probably the best way to go about this would be to apply for a second mortgage on your home. If you already own your home then you'll be in an even better position. A mortgage will have the lowest interest rates of any loan you could find to consolidate your debt. If you can't get a mortgage then another option would be a personal loan from a bank. This type of loan will probably have higher interest rates but it will still be a lot less than the rates on your credit cards.

Remember, a debt consolidation loan is not the end of all your financial problems, but it can help greatly in eliminating credit card debt and can take some of the pressure off your shoulders. It is something that can be done on your own, without paying extra to a lawyer or debt consolidation service to do it for you.

You will still need to be disciplined and make all your payments on time while staying within your budget. It won't be easy, but if you don't get started now it will only become more difficult as time goes on. If you get started today and stay focused on your goal then you'll soon be on the way to eliminating credit card debt.