The Six-Step Credit Card Debt Elimination Plan
You've heard it over and over again - you can make elimination work if you stick to your plan and budget, budget, budget. If you have tried and failed before, this article again looks at ways to reduce your debt including filing for bankruptcy as a last resort.
Debt won't disappear overnight but you can pay it down over time. The 18% interest levied on your charges alone is difficult enough to control let alone your actual bills. Add to this the fact that you are probably still spending on your cards and you can see how you may never . By using a savvy credit card debt elimination plan you can look towards the future one credit card bill at a time.
5-Step Credit Card Plan
1) I know you have heard this a thousand times but - pay more than the minimum on your credit card - it really works. Remember this is a credit card plan not a debt management plan. Your aim should be to rid yourself of debt not keep it under control.
By only paying the 2% or 3% required you make the bank rich while you stay in debt. Try doubling your payment by cutting costs elsewhere. Forgoing thar pair of expensive jeans may have to become necessary for your credit card debt elimination plan to work.
2) Snowballing as part of your credit card debt elimination plan- What is snowballing? This relates to moving debts from high interest cards to low interest ones. There are many companies who will allow this - so ask! If you find that all the money you owe is more than will be accommodated by the low interest card pay at least all the minimum payments on all your cards but one.
Where possible channel you due debts onto that one card and pay, pay, pay! As soon as you have a nil balance start on the next one - the less debt you have the more money you have = the less debt you will retain! You're on your way to a great credit card debt elimination plan!
3. Cashing out your savings account may give you some ready cash with which to pay off your credit card bills. Of course this may be the last thing you want to see on a credit card debt elimination plan but it may be worth it.
4. What about borrowing against a life insurance policy? If you are heavily in debt it may be a good idea. The interest rate on this type of loan is far lower than commercial rates. Don't forget that if you die before you pay everything, any monies outstanding plus interest will be subtracted from the money owed to your loved ones. So consider this carefully before you include it in your credit card debt elimination plan.
5. Loans from family and friends are another way in which you could get out of debt. Credit card debt elimination probably shouldn't involve those nearest and dearest to you but you may be able to lend with 0% interest. To be fair - put any agreements in writing.
6. Drastic credit card debt elimination strategies may involve lending against your house. If you have some equity on your home loan you may be able to use it to pay off your debts. In most cases you can deduct the interest. If your marginal tax bracket is 28% a 9% loan has an interest rate of 6.5%.
These steps will work for you of you are in mild to moderate debt. If you are in serious debt and have no way of paying of the money you owe you may need a more drastic credit card debt elimination plan such as borrowing on your 401(k) plan or filing for bankruptcy. Let's hope it never gets that desperate.
Our hot tip? Stop spending more money than you earn and cancel your credit cards if you know you are out of control. Try to make the most of your credit card debt elimination plan and you could be financially free sooner than you think! Go to it!
