3 Easy Steps To Lower Your Credit Card Debt

Are you like millions of other people who are being suffocated by immense credit card debts? If you have any common sense you will realize that it is time to stop creating more problems for yourself and that it is time to change your financial situation for good.

Let’s face it - when you are burdened with huge credit card debts it becomes an all out fight between you and the credit card companies to get what you want. It’s time for you to find the right information and figure out exactly how you can settle up with all of your credit card debts. First off, it’s important that you do not close any accounts right away. You will be losing a lot of leverage that you will eventually need. What you should do instead is pay off the card that has the highest interest rate first. Read on and use this valuable advice to help you gradually reduce your credit card debt.

First, it’s time to figure out what you owe. You can do this by calling the banks you have credit cards with and asking them what the balance outstanding is today. Make sure you write everything down and keep track of what you owe to each company on a sheet of paper. Also, make a note of what interest rate each company is charging you. Keep track of all this information in a file folder for future reference.

Now that you have a good idea of what you owe, it’s time to figure out your monthly payments. If you are simply making the minimum monthly payment chances are you will never be out of debt. You should never pay less than the previous months’ interest charge. Never forget that interest is always accumulating, therefore you should never skip a payment. This can land you in a lot of trouble with fees. Gather up all of your statements for the last year, sit down and add them all up to come to a reasonable conclusion in regards to what you are paying monthly on average. It will definitely take a lot of time and effort to figure out what monthly payments you will need to make in order to reduce your credit card debt. However, if you can find a reasonable amount that you can pay each month to gradually chip away at your credit card debt you will be well on your way.

Next, you should contact a credit counseling service. There are a variety of credit counseling companies that can help you through your battle with the credit card companies. It can be tricky to get everything working properly on your own. Credit counseling can help you in many ways because it takes a lot of guesswork out of the situation. They lay everything out for you in plain English and help you get on the right track to reducing your debt. They also have a lot of connections within the industry, which can give you some extra leverage. Credit counseling is usually very inexpensive if not free in some instances. Therefore, it would be a waste not to take advantage of this service because it can help you out.

In short, if you have found yourself, like so many others, with a high amount of credit card debt and are unable to pay it off before the next millennium then hopefully you have found the information you needed. It is important, however, that you continue researching and discovering your rights as a customer of the credit card companies. You can even get started today by calling up the credit card companies and getting some information about your account. Make sure that you ask them all the questions you have and get the answers you are after. Good luck.
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How to flee from holiday credit card debt

Climbing out of holiday debt isn't easy, but it has to be done. The holidays bring a flurry of emotions and obligations, and people find it easy to get lost in holiday spirit. You may feel guilty if you can't afford to buy your loved ones what they want, so you put presents on the credit card.

Come January, the holiday joy turns into debt regret. It's important to shed this debt quickly, and to learn how to prevent the same troubles next year.

Drowning in debt after the holidays is all too common. "It's important to first take a deep breath and realize you're not the only one struggling with looming holiday debt," says Michael Gold, a certified financial planner who works in investments at Wachovia Securities. The average American household is already saddled with debt before holiday spending, so "digging an even bigger hole of debt during the holidays is a major concern for most."

First step: Tally the damage
To sort through your post-holiday debt, write down your total outstanding balance, interest rate and minimum payment for each credit card. Gold suggests paying off the balance on your credit card with the highest interest rate first, and continuing to do so with all your cards until you end up with the lowest interest card. This is the only card that should not have a date with the scissors -- or at least temporarily retired.

You also have the option of consolidating your balances onto one or two cards with low or 0 percent interest rate. Many balance transfer cards carry their low rate for up to a year. As you pay the other balances off on the higher-rate cards, consider closing the accounts -- although that is a step to take slowly and carefully because closing credit accounts can hurt your credit score. See the story "Do's and don'ts for closing old credit card accounts" for details.

Some people have an alternative to credit cards. "If you're a homeowner, set up a home equity line and use that cash to pay off your credit cards. This can save hundreds, if not thousands of dollars in interest charges," Gold says. Be aware, however, that switching a debt from credit card to a home equity loan or line of credit is trading unsecured debt for secured debt. In other words, you could lose your home if you default.

If you feel like you can't go it alone, contact your creditors, or find an accredited credit counselor. Many creditors are willing to work out a repayment plan with you -- either directly or through the credit counselor -- if that will help them get their money without the help of debt collectors. Be mindful that changing your credit terms or paying anything less than you originally agreed can have a substantial negative effect on your credit score.

Whack unnecessary frivolity
Reducing discretionary expenses and cutting back on unnecessary spending and frivolous activity is a wise idea until your finances are back on track, Gold says. He suggests bringing lunch to work and eating out one less night a week. "You'll be surprised how quickly you can save up cash to get rid of that looming debt and begin a truly happy new year," he says.

In order to determine where unnecessary purchases are happening, you should track your spending. Manisha Thakor, co-author of "On My Own Two Feet," a personal finance guide for young women, has many years of experience in the financial services industry. She says it's time for a "financial reality check," which is like a diet diary. This is done by keeping a piece of paper in your wallet for one or two months and writing down everything you spend. "At the end of each month, tally it all up," Thakor says.

"If you find that you are spending as much or more than you make -- and many people do -- whip out two different colored highlighters. With one, highlight the true essentials. In another color highlight all the fun expenses."

Rough budget benchmarks
Thakor says that for most people, balanced spending of your total gross income should be as follows: roughly 25 percent goes to taxes, 15 percent to savings, 45 percent to foundation expenses and 15 percent to fun expenses. "If your budget pie slices are out of whack, slow down and look item by item to see what you can cut back on," Thakor says. Some of her suggestions are getting rid of magazine subscriptions you don't read and no longer going out for drinks with people you don't like.

Once your post-holiday finances have shifted from red to black, learn how to prevent yourself from ending up with the same debt next year. While it may sound early, Gold says you should prepare a budget for next holiday season now. List every possible person you will give gifts to. Look at what you spent this year, inflate it by 2 or 3 percent and use that as your budget. "Divide that number by 12, for 12 months, set up a separate account and have that number automatically deposited into that account. Come December 2008, you have your holiday money," Gold says.

Plan now for '08 holidays
You should also purchase all of your gift-wrapping, cards and decorations in all the post-holiday sales, when everything is heavily discounted, and save them for next year.

Gold also suggests comparing prices on the Internet before going to the store, as you can find some of the best deals this way. Avoiding frequent dining with friends and family during the holidays is another way to cut back. "Instead of going out with every couple in the neighborhood at fine restaurants, consider having a neighborhood potluck dinner," Gold says. "Each couple brings over a dish they prepared and you'll be surprised at how much fun you can have while saving a tremendous amount of money."

A final suggestion is to do a "Secret Santa" or "Secret Hanukkah Harry" gift-giving method. Instead of every single relative buying each other gifts, each person picks a family member's name from a hat (which stays secret) and buys that person a gift. You can place a price cap on how much everyone can spend. This can save you and your family hundreds if not thousands of dollars, depending on how big your family is. "You might be surprised by how many family members feel the same way you do when it comes to spending for the holidays. Trust me, your loved ones will be relieved that they won't have the daunting task of shopping and spending for so many relatives this year," Gold says.

Crawling out of debt isn't easy, so don't keep doing this to yourself every holiday season. Tackle the debt wisely now, and plan way ahead of time for the holidays next year. There's nothing like starting off a new year fresh.
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