Reducing Credit Card Debt
Posted on November 23, 2012 by Michael Martin Leaño
Reducing your credit card debt is easier said than done, especially in light of the tighter lending standards of today's banks and lending institutions. Nevertheless, simplifying your finances and getting what you want out of life isn't necessarily an unachievable pipe dream because of today's tough economic climate. Besides which, these credit woes are exactly the reason why people at present should bring down their credit card balances altogether. Interest rates are rising, credit limits are plummeting, and many credit avenues are being shut down altogether. Something must be done in order for the average working man or woman to survive their credit debt dilemmas.
A Structured, Disciplined Approach
In order to get yourself out of a credit card debt, you need to first take it on in a disciplined and structured fashion. Regardless if your balance is thirty thousand dollars or merely three thousand dollars, you still need to approach the problem step-by-step and in an orderly manner in order to surely get rid of your debt as quickly as possible. You can do this by taking stock of the details regarding your debt. You should be well aware of where you stand in a financial point of view. More to the point, you should have a clear estimate of your debt. Double-check your nine thousand dollar credit debt, because it may actually be eleven thousand or fourteen thousand instead. Your self-assessment should be accurate and truthful.
Be brutally honest with yourself when assessing your debt; it may be painful, but you need it in order to truly hit your target. After you've written down your debt and interest rate on every credit card you own, you should then improve your rates. Learn to negotiate a lower interest rate from companies by calling them up and making a formal request of sorts. You can always lower it a percentage of two, which will help in the long-run as you save up to pay off your debt. Also be aware that the success of your calls for lowered interest will also depend on your credit rating. At any rate, different lenders tackle this issue in different ways, so it doesn't hurt to try it out even at the risk of being rejected.
Tracking Down Costs and Creating a Budget
Tracking down your expenses is another way of making sure that your money isn't being wasted on frivolous expenses, especially in light of all the debt you've acquired. Be sure to write down all your important bills (cable, gym, phone, minimum credit card payments, car payments, insurance, utilities, mortgage, and so forth) and separate it from your luxuries and variable purchases such as travel, entertainment, and restaurant meal costs. By doing so, you'll be building a reliable foundation for your budget. You should also take a year's worth of your credit card bills in order to study them and know your pattern of spending. Armed with this knowledge, it'll be much easier to track your expenses. Financial software can also be used to assist you.
Once you have a firm grasp of your spending habits, then it's about time to create a budget. Having a budget is a sure-fire way of limiting costs and rationing your money on your bare essentials without wasting cash on unnecessary items and whatnot. Cut down on your expenses, keep those that are absolutely necessary, and be realistic with your budget. Just because you need to pay off your debt doesn't necessarily mean you should live on bread and water like some sort of common crook. Besides which, by not splurging on certain luxuries, you'll be able to pay off your debts in no time without abandoning essential purchases like food and utility bills.