Doing Away With Credit Card Debt

The mantra of the plastic world, "charge it," often leads to runaway debt. High interest rates and low minimum payments escalate balances on credit cards almost as quickly as the purchases do. Therefore, on more than one occasion, high credit card debt rears its ugly head and engages in battle with the unsuspecting consumer.

After all, the initial stage is never set for an awareness that plastic may be taking over the life of the unwitting consumer. Plastic money is a way of life. It's quick and easy, almost painless in fact. That is, until the totality of minimum balances due is larger than the monthly income of the consumer. Payments are missed, late fees are tacked on to the account, and credit ratings drop. The consumer's credit, or lack of credit, has become a major source of stress in the life of the consumer.

So, how does one reduce credit card debt to a manageable level? How does one say no to all of those prettily colored and attractively designed rectangles of plastic? It may not be easy, but it is possible, especially when a realistic goal is in place. All of that debt did not happen overnight, and it isn't going to disappear overnight either. Small, gradual changes are the first step to debt overhaul.

Additionally, credit card companies do not want to see customers file bankruptcy. Since the credit card companies want to receive payment, they will accommodate consumers rather than make the changes more difficult. Contact the credit card companies, explain the situation, and ask for any help at all- reduced interest or late fee reduction. This is good news for anyone who is attempting the do it yourself approach. This approach relies on the consumer's desire to get out of debt through disciplined actions.

Consumers with too much debt will need to incorporate a few necessary changes at least temporarily. First and foremost, whether you call it a budget or a spending plan, this is the first course of action. In fact, incorporating one of these initially may have saved you from the spot you are in now.

The key is for the consumer to clearly understand the relationship between income and debt. Obviously, total expenses should not exceed total income; and this includes expenses outside of credit card use. Therefore, necessary expenses, such as mortgage, insurance costs, services, and utilities, should be subtracted from net monthly income. The net balance is what is left for all other expenses, including groceries, gas, and credit card purchases. Write down each expense and keep track of them for at least a month. What you think you spend and what you actually do, may be two entirely different creatures.

If the expenditures exceed the income, then there are only two choices- spend less or earn more. Usually the first course of action is easier than the second. If your debt is not too severe, a temporary decrease in spending may be all that the consumer needs to get back on track. If the consumer can look for ways to decrease spending and incorporate them into daily living, then the battle against too much debt has begun in earnest.

Cut back a small amount of spending in as many areas as possible e.g. eating out, expensive coffee, daily newspapers, periodicals, novels, lottery tickets, etc. Small changes are often the easiest and least painful to make. Use the savings to make a larger payment on a credit card balance. The next month's bill will be that much smaller. If you have played your cards right and decreased the amount charged to your credit card each day, the bill will be reduced even more.

However, if the debt is too severe, drastic measures may be called into play. An increase in income and a decrease in spending, at the same time, may become necessary. It follows that a part-time job may become a necessary evil.

Working two jobs, even if one is only a part-time job, can become increasingly stressful. However, acquiring a second job with the mind set that it is temporary, setting a quitting date, and being careful not to do anything that would sabotage those goals, helps to keep the stress in perspective. Different times of the year are more conducive to acquiring part-time seasonal work, such as during the winter holiday season. Certain industries also pick up extra employees during the summer months.

If the thought of getting a second job is simply too much, or if circumstances preclude getting a second job, there are still measures that can be taken. Temporarily do away with satellite or cable television. Eliminate add on features to your telephone service, such as call waiting. Plan economy meals and shop accordingly. Use the extra savings to pay off your credit card debt. Start with the smallest bill first since that will be the quickest one to pay off. This will free up even more money at that time which can be used to further pay off the debt.