Probably most people who are finding that substantial credit card debt is proving difficult to manage will not care to dig very deeply into this topic. Such is the nature of denial. We'd prefer simply to ignore any examination of signs that we may be compulsive and out of control around money. It's too painful to contemplate.
Indeed, most who have dysfunctional and compulsive tendencies when it comes to money will not begin to look closely at their debting behavior until it reaches crisis proportions. Only then, as panic begins to take over, will a degree of willingness to examine one's relationship to money, personal finances and debt begin to creep in.
Often, the first impulse when a personal financial crisis erupts is to blame others and assume the role of a victim. Obviously, this offers no solution, and probably will compound the dilemma. Next, some willingness to seek debt help may occur, and the debtor then looks at the possibilities of borrowing from family or friends, thus dragging others into the problem who don't deserve it.
If that fails to work, alternatives such as debt consolidation, refinancing a mortgage and even bankruptcy are considered. These measures can reduce debt and provide some relief, but always fail to address an underlying problem of compulsive debting.
If you find yourself in this situation, there are a number of clear signs that you may be a compulsive debtor. Here are a few questions you might ask yourself:
1. Is it difficult for you to pass up buying something on credit because it's a really good deal?
2. Does having the ability to whip out a credit card for purchases give you an ego boost, a feeling of being accepted, like being grown up or a member of a privileged club?
3. Are you using one credit card to pay off another?
4. Do you bounce checks from time to time?
5. Are you having problems meeting just ordinary personal expenses, and do you get a feeling of accomplishment when these obligations are satisfied?
6. Do you live in drama and chaos when it comes to money, continually having a crisis to deal with?
7. Are you vague about your personal finances, not being clear about how much you owe, your monthly expenses, interest rates and the like?
There are a number of other indicators, but, if you answered several of these questions affirmatively, then you may be a compulsive debtor. Debt relief will evade you until you get a grip on the belief systems and behavior underlying your money problems. Credit counseling is probably in order, and you might benefit from a spiritual program such as Debtors Anonymous.
Monday, May 12, 2008
Will I Ever Get It Paid?
Credit Card Debt - Just Say No!
Temptation. The world is loaded with it. As soon as you turn 18 the debt peddlers start their campaigns. It looks like such a great life, filled with fabulous vacations, fine clothes and lavish meals. Smiling happy people who just can't wait to be -- in debt up to their eyeballs. Thats right. The credit card companies offered and you accepted, and now your stuck too deep in credit card debt to afford all the things they promised you. Will you ever get out of credit card debt? You can! But you have to make a plan and stick with it. You can be completely free of credit card debt, and have good credit. It takes patience and work. But you can do it.
Ok, enough of the RA RA cheer leading. You want facts. How can you get out of credit card debt when your minimum payment is not enough to even cover the interest? There are a few ways of getting the debt paid down in a reasonable amount of time. So lets cover just a couple.
Put all your debt on a new card.
This is actually one of my favorite methods, but it requires that you still have good credit and that you get a good deal on the new card. Many credit card issuers offer zero percent or extremely low rates on balance transfers. This is a strategy that is great, builds your credit score and saves you money. It comes with a warning though. It requires discipline. To get out of credit card debt using this technique, you must be diligent about not incurring any further credit card debt. Once you pay off the old cards, get rid of them. I mean destroy them, don't just hide them in a drawer somewhere. In fact, it isn't a bad idea to destroy the new card when they send it to you. Now, you have no way to run up more credit card debt, you have a lower interest rate, you only have one payment, you haven't transferred your debt to your mortgage. Its really a win, win situation in every area.
There are also credit management services.
This is an o.k. method, sometimes. It also allows you to make one payment, to one entity, that distributes the payment to all of your creditors. The amount you pay monthly is based on your income. If you are overloaded with credit card debt, this is an option. These services have helped a lot of people, and in some cases using these companies is better than just getting another credit card, and running the risk of just running up another credit card debt on a new card. My main problem with these services is that many, in fact I believe MOST, are rip offs. They charge exorbitant fees for their services. In many cases very little of what you initially pay goes to paying down the credit card debt. Much of your payment, at least initially, just goes to the company. So be careful if you go this route. Check with the Better Business Bureau.
Pay off the debt slowly.
Well, this is the usual method. It is sometimes called the "debt snowball". Pay minimum payments on all but one card. Make a higher payment on that card until its paid, and then start paying down the next card. Start out with the card that has the highest interest rate, or the lowest balance. Either way, this method begins the process of getting the debt down to a manageable level. It actually gets the credit card debt paid down pretty quickly if you use it correctly.
Lets say you have three credit cards, each with a $25 dollar minimum payment. Your total monthly payments are $75. Lets also assume that you can afford to pay an additional $25 to pay down your debt. On two of the cards, you would continue to pay the $25 minimum monthly payment, on the third credit card you would make the $25 dollar minimum plus the extra $25 for a total of $50. When that credit card is paid, you would have $50 to apply to the next credit card. So you would make a payment of the $25 minimum, plus the additional $50 for a total payment of $75. As you pay off each credit card, the amount that you are able to apply to the next credit card increases until you are out of credit card debt.
Many people are able to get their credit card debt paid off in a few months with this method. Pick the one that's right for you and get started. The sooner you get going, the sooner you will be out of debt.
Temptation. The world is loaded with it. As soon as you turn 18 the debt peddlers start their campaigns. It looks like such a great life, filled with fabulous vacations, fine clothes and lavish meals. Smiling happy people who just can't wait to be -- in debt up to their eyeballs. Thats right. The credit card companies offered and you accepted, and now your stuck too deep in credit card debt to afford all the things they promised you. Will you ever get out of credit card debt? You can! But you have to make a plan and stick with it. You can be completely free of credit card debt, and have good credit. It takes patience and work. But you can do it.
Ok, enough of the RA RA cheer leading. You want facts. How can you get out of credit card debt when your minimum payment is not enough to even cover the interest? There are a few ways of getting the debt paid down in a reasonable amount of time. So lets cover just a couple.
Put all your debt on a new card.
This is actually one of my favorite methods, but it requires that you still have good credit and that you get a good deal on the new card. Many credit card issuers offer zero percent or extremely low rates on balance transfers. This is a strategy that is great, builds your credit score and saves you money. It comes with a warning though. It requires discipline. To get out of credit card debt using this technique, you must be diligent about not incurring any further credit card debt. Once you pay off the old cards, get rid of them. I mean destroy them, don't just hide them in a drawer somewhere. In fact, it isn't a bad idea to destroy the new card when they send it to you. Now, you have no way to run up more credit card debt, you have a lower interest rate, you only have one payment, you haven't transferred your debt to your mortgage. Its really a win, win situation in every area.
There are also credit management services.
This is an o.k. method, sometimes. It also allows you to make one payment, to one entity, that distributes the payment to all of your creditors. The amount you pay monthly is based on your income. If you are overloaded with credit card debt, this is an option. These services have helped a lot of people, and in some cases using these companies is better than just getting another credit card, and running the risk of just running up another credit card debt on a new card. My main problem with these services is that many, in fact I believe MOST, are rip offs. They charge exorbitant fees for their services. In many cases very little of what you initially pay goes to paying down the credit card debt. Much of your payment, at least initially, just goes to the company. So be careful if you go this route. Check with the Better Business Bureau.
Pay off the debt slowly.
Well, this is the usual method. It is sometimes called the "debt snowball". Pay minimum payments on all but one card. Make a higher payment on that card until its paid, and then start paying down the next card. Start out with the card that has the highest interest rate, or the lowest balance. Either way, this method begins the process of getting the debt down to a manageable level. It actually gets the credit card debt paid down pretty quickly if you use it correctly.
Lets say you have three credit cards, each with a $25 dollar minimum payment. Your total monthly payments are $75. Lets also assume that you can afford to pay an additional $25 to pay down your debt. On two of the cards, you would continue to pay the $25 minimum monthly payment, on the third credit card you would make the $25 dollar minimum plus the extra $25 for a total of $50. When that credit card is paid, you would have $50 to apply to the next credit card. So you would make a payment of the $25 minimum, plus the additional $50 for a total payment of $75. As you pay off each credit card, the amount that you are able to apply to the next credit card increases until you are out of credit card debt.
Many people are able to get their credit card debt paid off in a few months with this method. Pick the one that's right for you and get started. The sooner you get going, the sooner you will be out of debt.
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