Freedom from Credit Card Debt is Possible. Here’s How. - American Credit Foundation

Freedom from Credit Card Debt is Possible. Here’s How.

credit bills
Are you having cold sweats? Are you experiencing bouts of anxiety? Do you find yourself up at night worried about your financial future or even how to pay your ever-mounting bills on time? If you’re experiencing any of these troubling symptoms, you might be suffering under the weight of crippling credit card debt.

Furthermore, you’re not alone. Millions of Americans don’t have a good hold on their debt, particularly those interest-heavy credit card payments. It’s stress inducing and financially unhealthy. For you and for everyone else who finds themselves in this unenviable situation, it’s time for a change.

But first, it’s important to know what you’re getting into. It will likely be hard work — but with good advice and a solid plan, you can make it happen, and you’ll breathe easier for it.

With that being said, here’s your prescription for success and peace of mind:

feeling of freedom from peace of mind

Make a budget and craft a plan. To get out of credit card debt, you’ve got to first know what you’re dealing with and that means familiarizing yourself with your entire financial situation, warts and all. It may be painful, but it’s necessary if you’re going to reach your goal. List all of your credit card debts along with the minimum monthly payments and the corresponding interest rates. Then calculate the entirety of your monthly expenses and your income.  From there, find where you can allocate extra money to credit card payments. Start by paying off the card with the highest interest rate. Once that one’s gone, allocate that money to the card with the second-highest interest rate in addition to whatever you were paying on that card before. Continue in this fashion until you arrive at zero on all of your outstanding credit card debts.

Remember, discipline is demanded and patience pays off, so hang in there no matter how long it takes.

Change your money game. With a firm budget in place you’re off to a good start. However, you may still fall short or the plan you put in place may not reap rewards as fast as you’d like. If that’s the case, it’s time to trim the fat. Drop that gym membership and workout to free online videos. Consider limiting money-guzzling activities and look for free activities instead. A quick internet search local to your city or surrounding area will likely yield plenty of results for fun on the cheap. You can also rent movies from your community library, or you can opt to treat your kids to a free restaurant meal at participating establishments. Many of them offer free grub to little ones on certain days of the week. Finally, if that doesn’t do the trick or make your debt disappear as quickly as you might like, it may be time to look for a second or third job.

Pass the buck – so to speak. When the interest just keeps coming, one of the best ways to stop it in its tracks is to transfer your credit card balance to a card that offers zero percent interest. Many of these cards can net you no interest for at least a year or longer if your credit score is at a certain level. If you can snag one of these deals, do it, but be sure to allot a high enough monthly payment to ensure you pay off your balance in full before the special promotion runs out. However, if your finances don’t allow that, commit to paying as much as you possibly can each month to ensure you get the most out of the zero-rate deal.

Put away the plastic. This may sound obvious, but it needs to be said. Once you’re on the path to eliminating credit card debt, the last thing you need is to add to it. Remember your budget? If you were honest when you created it, it should keep you on track and prevent you from steering off course. Stick to it. If need be, cut up your credit cards to remove the temptation to use them.

Make adjustments when needed. Each month it’s important to re-assess your budget, your monetary income and spending needs and make changes accordingly. This serves to keep your budget honest and helps you identify when and if you can allot more money certain months to credit card debt. It also helps you to recognize if you need to cut back some months. Although this isn’t ideal when you’re working to cut out debt fast, it may pay off in the long run if one month you have an extra expense and are able to plan for it rather than being caught unawares and, ultimately, forced to cover it with a credit card.

Seek out support. Feeling overwhelmed? Need help creating a repayment plan? Not sure where to start?  Consider credit counseling services as an option. Reputable and certified credit counseling services can help you budget, assess your financial situation, and keep you on track. Just remember to do your homework first: While most credit counseling organizations are legit, there are some companies out there that are simply scammers hoping to take advantage of others. Look for a non-profit organization that offers free consultations. A few more signs that things are above board? Look for things like client testimonials, BBB registration, and a physical address.

Plead your case.  Pick up the phone and call your creditors. Let them know that you are having trouble making your payments and explain why. Never underestimate the power of honesty and full disclosure when trying to get someone to work with you. But remember: it’s important to contact them before you start missing your payments and your account has been turned over to a debt collector. Negotiating is a lot easier and likely to net you beneficial results if you’re in good standing with your creditor.

Note: if you’re working with a credit counseling service, they will usually do this on your behalf.

Have an end goal in mind. Knowing what’s in front of you once that debt is erased is another trick for keeping you on task. It could be anything, such as a once-in-a-lifetime vacation, a new car, or simply financial peace of mind. Whatever it may be, have your reward in mind and keep it at the forefront of your mind whenever you feel your motivation faltering.

American Credit Foundation is a non-profit consumer credit counseling organization headquartered in Midvale, Utah, a suburb of Salt Lake City. American Credit foundation has been helping people achieve their financial goals since 1994. The company was founded with the objective of meeting a long-standing need for a debt management program designed for people who were frustrated with their debt situation and looking for a simple way to get out of debt quickly, as well as lower their monthly payments without having to qualify for a consolidation loan.