Battling Credit Card Debt - 4 Tactics to Ensure Your Victory
Battling Credit Card Debt can be tough, especially in today’s economy. Right now, as the industry faces the crunch of some bad lending policies, and loan after loan is being defaulted on, they are becoming much more stringent on their credit card customers. Where there used to be a 7 to 10 day grace period on making your payment, many people are finding that if they are a single day late, the banks bump the interest rate up as far as they can justify.
It really is like a battle, with an enemy who’s hurting and fighting wildly for his survival.
CCCs Bank on Stupid Mistakes and Bad Luck
Even before taking advantage of late payments that could as easily be caused by the post office as by your actions, the banks have counted on the fact that you arr human to bolster their own profits. All it takes is one silly mistake or one minor disaster to force the shift from sensibly using credit for convenience to depending on your credit card just to make ends meet.
One little emergency when you don’t have cash on hand, and your credit card could end up eating as much as 30% of your monthly budget. That’s one out of every three dollars—one out of every three days you work, goes to pay down your debt. When the numbers look like that, it’s hard NOT to take the perspective that you’re battling credit card debt.
Well, Here’s how you win.
1.Establish a First Line of Defense.
And the first step in battling credit card debt is to create a line of defense, not just against the banks, but against those stupid mistakes and all that bad luck. And you do that by establishing what we’ll call your defense fund. This is money that you will set aside just in case any of those little emergencies pop up.
To begin, you want to set aside $1000. It may take time to get there, but it will be worth it never to have to pull out those cards the next time something happens.
2. Draw Up Your Plan of Attack
Your plan of attack is going to be figuring out your monthly budget. You need to figure out how much money you have coming in, and then assign every last penny a role in battling credit card debt. What to the necessities like food, clothing and water cost you every month? Other things like gas, cable, telephone? Rent or mortgage? Car payment? A little bit of ‘fun money’. Everything else needs to be on the front line, actively battling credit card debt.
3. Start Preparing A Sneak Attack
At first, “everything else” won’t seem like much. It might just be $25. That’s okay. Because we’ve got a sneak attack in the works. You’re going to send in that extra $25 (or whatever) to the card with the lowest balance. That extra little bit will help you pay off that card in a surprisingly short amount of time.
Now, whatever you were paying on that card…the minimum payment + “everything else” you could muster…add that entire amount to your payment on the card with the next lowest balance. If your minimum payment on the first card was $25, and you managed an extra $25 each month, you’ll take that $50 now and apply it toward the next card. If that payment is $40 per month, then you’ll be paying $90 each month. Once it’s paid down, you’ll add that $90 to the next card. Say it’s minimum is $125 per month, you’re now paying $215 per month…see how it all adds up?
4. Commit to Destroying Your Debt
Now, it’s going to be nice to finally get rid of your credit card debt. But don’t stop there. If you’re currently paying, say, $500 per month in credit card debt, then once you’re done battling credit card debt, take that $500 per month and build up your “defense fund” to $3000. That ought to ensure that you never have to rely on those cards in an emergency again.
But you still have debt. And even if it’s healthier secured debt, like a car payment, or a mortgage, it still hangs over your head. Take that $500 per month and add it to your $200 per month car payment. How quickly can you pay it down if you’re sending in $700 per month? And what will that $700 per month do when you add it into your mortgage payment?
See? This isn’t just about battling credit card debt. It’s about destroying debt entirely. Go ahead, add up exactly how much you’re paying in debt every month. Right now. What could you do if you had all that money right now, every month, to spend as you please? Think about it. But only for a moment.
You have a battle to prepare for.
Danny Thompson is a freelance writer with nearly a decade of experience writing marketing materials for financial institutions. Find more tools for battling credit card debt, here.
Article Author :Danny_Thompson
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