Sun, 10th May, 2009 - Posted by Nash

Powerful methods to get you out of your credit card debts


get out of credit card debts

Everyone can get a little sloppy with cash and it’s smart to notice. But what’s squeezing you is the big stuff you ladle onto your credit cards.

~ Jane Bryan Quinn

Credit card debts! ARGHH! Are you stuck in this financial mess? Don’t worry, you’re not alone. It’s a very big group out there. This is one of the low-down in personal finance and requires smart debt management methods.

My friends and I, we discussed a lot about it. And we agreed on one thing – we need to GET OUT of this mess. It’s like being in the quicksand you know. If you don’t do anything, it’ll sink you dead. If you try to do something, you just might get out of it.

So, what to do? Well my friend, please read on.

CAUTION: The discussion below can get technical and it may be a bit dry. So, if you wanna get a cup of coffee to zest you up before you read on, then, by all means, please do so.

Step 1 -  Reduce your credit card debts using the snowball effect

Huh? Don’t worry, it’s the term we’re gonna use for this method. Ever watch a cartoon show where a small snowball is thrown from the top of the hill and it rolls down and gets bigger and ended up to a size of a house? It’s the same principle.

First thing to do -  make a budget. List down all the income you’re getting for the month and what you have to spend it on.  It can be tough, but trust me, it’s worth it.

Next - from the list of your expenses, check out the things you can live without, and things you can cut on. For example, fewer trips to the mall or the cinema. I’m sorry, you gotta make some lifestyle adjustment here.

Now, after doing that budget and trimming down your expenses. You should get some balance at the end of the month. You should use this balance to pay to your credit card with the highest interest. Why pay the credit card with the highest interest? Coz it’s the one that is burning up the largest hole in your pocket.

In the next month, you should do the same. Use the balance and keep on paying that credit card until the debt is finished and then move to the next credit card.

Now, here’s the hard part of this method - the balance that you use to pay for the current month cannot be less than the previous month (that’s why it’s called the snowball effect).

And the next hard part is - discipline. This is where a lot of people fail. But it won’t be you. Why? Coz trust me, there are people who can do it and got their credit card mess sorted out. So if they can do it, so can you.

Step 2 - Get a personal loan to pay off your credit card debts

Ever heard fight fire with fire? Well, this is what it’s all about. However, to make it work, you need to get a personal loan with a lower interest rate than your credit card’s interest rate. If you dont know what is your credit card interest rate, give your bank a call and they’ll tell you.

If your credit card interest rate is 18% per year (and it’s quite common), you should take a personal loan with a lower interest than that (I checked the market and found out that the personal loan interest rate is about 10% per year).

Sum up all your credit card debts, and take up a personal loan with that amount and settle all your credit card debts. In one swift move, you have eliminated all your credit card debts! And now, you just got to concentrate on one debt (the personal loan). If you do the math, the monthly amount that you pay for the personal loan will be less than the monthly amount that you pay for your credit cards.

CAUTION! Once you’ve settled your credit card debts - cut out all the cards! The worst thing that can happen is that you’ve taken a personal loan to settle your cards, only to get into the debt again. But now, you got a personal loan AND your credit cards to pay.

Step 3 – Talk to the bank (it’s a smart personal finance move)

I’m sure you’ll probably say “duh!”  You’ll be surprised that many people don’t like to talk to the bank about their credit card problems. But trust me, banks are ever willing to help and they might come out with a plan to help you out. It’s a win-win situation for the bank. They want you to pay the money back so they’ll find a way to help you out. A person who is discipline at paying back to the bank is a great customer to the bank and they sure would like to keep him.

I’ve tried this many times when I was clearing off my debts and I always get a good response from the bank. Don’t shy away from the bank - talk to them and they’ll help you out.

Step 4 - Get help from the professional financial advisors

Well, personal finance isn’t a breeze for everyone. If you think you are drowning from your credit card debts - and you just can’t find a way to get out of it - then get professional help. I’m using the word “professional” here coz that’s where you can get helpful, tested and qualified advice.

Who are those professional ones? There are a lot of financial planners or support groups out there. Have a search in google and you’ll find a whole list of them.

To summarize - credit card debts is like being in a quicksand. You must do something to get out of it. At the very least, if you’ve read this post from finish to end then it’s a start.

Do you want another opinion? Got this smashing video from YouTube for you to check:

Credit card debt, bankruptcy & personal finance

by visionvictory.

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