Credit Cards: Getting Out of Credit Card Debt
There are few things as worrying in life as a growing credit card bill which you know you cannot afford and even more worrying, is when you have a family to provide for. The sense of guilt and despair can be overwhelming, but don't fret just yet. There are answers to the problem of mounting credit card debts and there is plenty of help available.
It isn't easy to get rid of your debts but with some hard work it is possible. Below are some tips to help you get your finances back under control.
1. You've recognised you have a problem. Well done. It may be later than you should have but at least you've taken the first step and acknowledged something needs to be done about your growing debts.
2. Print out or collect up a couple of your recent bank statements. Now add up all your incomings and all your outgoings. Then think about any other essential spending you make every month. Be realistic. For example, what do you usually spend on groceries? Have you any savings put by for emergencies such as car repairs, central heating oil, birthday and Christmas presents etc? What about school fees/ dinner money, trips away? How much do you spend on clothes, shoes etc in a typical month? Are all your utility bills paid by direct debit or do you need to add them onto your list of outgoings? Think carefully as you do this and try not to miss anything out.
Once you've physically seen how much you have left (if anything) at the end of the month, it can be quite a shock to the system and you'll soon see where all your debt has come from.
3. Set yourself a realistic budget. If you're bringing in more than you are spending each month, that's a good starting point. However, if you're spending more than you earn then you need to see what, if anything, you can cut back on. This may be where it gets really difficult and you may have some very hard choices to make. Perhaps you smoke and enjoy a few drinks during a typical week. You'll have to think about whether you can afford to continue living this lifestyle and see if you can possibly either quit or at least cut down on the excesses.
If you do all your grocery shopping in a supermarket, you may need to consider shopping around for the best prices. Perhaps buy as many of your toiletries as possible in the local budget store and try not to be so wasteful with food and products that you do buy.
Take a shopping list with you when you shop and don't allow yourself to become distracted by bargains. Instead of bringing your debit card, or worse still your credit card, pay for everything in cash. If you don't have enough you'll just have to leave some unnecessary purchases back!
Buy own label products where possible. Very often they contain very similar ingredients but the packaging is inferior. You can get around this by placing the cheaper products in different containers when you get back home - so no-one will be any the wiser!
4. If you know that you are way out of your depth, make sure you pay your essential bills such as mortgage or rent, electricity, heating and food before anything else. You may need to consider transfering your credit card debt to another provider on a cheaper interest rate although this is often only a short term solution. Another thing you should consider is possibly taking out a consolidation loan to pay off the credit card debts you've built up. You'll have lower monthly repayments and the interest will be considerably less but they'll be spread over a longer period of time so it's important that you understand the consequences of taking such action and learn from it... Don't just use it as an excuse to start from scratch on your credit card again!
Consider getting rid of things you don't really need and which are costing you money you simply don't have. For example, do you really need that magazine subscription; can you afford satellite television; do you even go to the gym that you are paying a monthly subscription for?
5. If you are unable to secure a loan or still can't afford the repayments you should contact your local citizens advice bureau (CAB). You'll be able to speak with a professional advisor there who will help you work out what your committments are and how to work around them. You may be able to get them to contact your credit card company to get the interest frozen on your outstanding balance so any future payments you make will go off your loan and help to get the balance down. If this is not possible, they'll be able to suggest other options for you.
6. Learn from your mistakes. Don't let it all wash over you as it's very easy to get trapped by credit card debts again. If you really need a credit card, use it wisely and always pay it off in full each month!
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