Simple tactics for climbing out of credit card debt

Though it may sometimes feel like it, having credit card debt to mend is not a dead end. In fact, just as there are myriad ways to fall into debt, there are many ways in which indebted consumers can traverse this roadblock. They should not, therefore, jump to dire conclusions or panic and take drastic measures. Instead, consumers with debt problems should initially take a breath, employ logic and try addressing a few simple lifestyle changes.

First, avoid unnecessary spending and lance the lavish, eradicate the excess. Think about what got you into debt in the first place. Was it, perhaps, spending that exceeded your means? Logically, if irresponsible purchasing got you into trouble, then removing perks will help remove debt. Cut your cable. Smite your smart phone. Eschew extravagances like vacations and meals out. Basically, try to avoid spending money beyond what is essential. Fund sustenance, housing, and healthcare; beyond that, try to embrace frugality.

Similarly, the debt-conscious consumer should intelligently allocate his or her monthly balance allowance. Say you have three credit cards, each with a minimum payment of $50, and $300 to apply to credit card balances monthly. Rather than making equal payments to each, pay $200 to the card with the highest interest rate and the minimum to the two others. Then, after the first has been paid off, apply this principle to the card with the next highest interest rate. Once each card is paid off, you will have relatively more money to apply to the others, and will suffer less of an overall hit from interest. Finally, after all of the cards have zero balance; apply the monthly allocation previously earmarked for credit card debt to a car loan or mortgage.

However, you might say, ‘what if I can’t pay the minimum on my card(s)?’ In this case, the answer is, don’t pay anything. If you pay below the minimum plateau, the credit card company will treat you as if you paid nothing and apply penalties and delinquency. So if paying a small amount is exactly the same as paying nothing, why not keep the money for the time being?

Now, if you have stopped making payments on your credit card balances, you should take the diplomatic route and try to negotiate with your credit card company. Determine exactly what you can afford to pay each month, and communicate that to the customer service rep. Set as goals for this negotiation a pay-back plan centering on your feasible monthly minimum and a restructuring of interest rates. Use tact and patience with this person because he or she most likely spends all day being yelled at and will respond to reason, calm and manners.

Finally, if the aforementioned steps have not proven successful, or your situation is on the more serious end of the spectrum, it might be time to call in the debt cavalry. Your options now are debt management and debt settlement.

Debt management is when you pay a debt counselor to help negotiate lower interest rates and arrange for a payment plan that will allow you to be debt free in 30-60 month. If you do enter into debt management though, your credit card company will close your credit cards.

Debt settlement, on the other hand, involves paying a debt counselor to negotiate a lesser balance which you then pay as a lump sum. This option is applicable if you are seriously delinquent or have defaulted on your credit card payments and is more detrimental to your credit report than debt management. If neither debt management nor debt settlement is appropriate, you may need to file for bankruptcy and start anew.

Overall, it is important to realize that there are ways in which you can fight back against your debt. You are not being thrown into the battle without a weapon. However, there is no secret quick fix. Getting out of debt requires commitment and sacrifice, but be aware of the tools you have and use them wisely. -Odysseas Papadimitriou