Tips to Overcome Debt Anxiety
Do you feel like you're drowning
in debt? Do you dread the mailman
dropping off yet another bill? Chances
are that some of those bills are
for credit cards. If you can get
a handle on your credit card debt,
you will quickly find yourself much
better off. Why? Not only will you
save a lot of money in interest
charges, but if you ever miss a
payment on your card(s), it can
go on your credit record as a black
mark for seven to ten years. This
could hurt your chances of getting
credit in the future, such as for
a car loan or mortgage.
Tip: Speaking of credit, it's always
a good idea to keep on top of your
credit rating. Visit the Credit
Assistance section of this site for more information,
or order your credit report now.
So, to help out, here we will give
you five things that you can do
to reduce your credit card debt:
1.
Pay more than the minimum
& pay on time
To have even a hope of paying off
that card debt, you must make at
the very least that bare minimum
payment listed on your statement.
Just as importantly, pay it on time
to avoid a finance charge (which
will make next month's minimum
payment even higher).
2. Make a budget
Schedule your payments and what
you will pay each creditor when.
Here's an example (not necessarily
appropriate for all situations):
Say you owe a total of $1,000: $200
to your dentist, $400 to a credit
card, and $400 to your accountant.
That means 40% of your debt is to
the credit card, 40% is to the accountant,
and 20% is to the dentist. If you
have $100 a month for repaying debt,
send the dentist 20% of $100, or
$20, put $40 on your credit card,
and send $40 to your accountant.
3. Start your own system for
credit card debt reduction
Evaluate your situation and create
a structured system for paying your
bills. Set deadlines and rules and
stick to them! Need help getting
organized? There are some great
software programs that are easy
to use and that can help you with
this task, such as Quicken.
4. Wheel and deal, within reason
If you can negotiate with the credit
card companies, you can really help
yourself meet that goal of eliminating
your credit card debt. Why will
they listen? It’s simple:
so many people out there have card
debt just like you do, and creditors
have realized that they need to
be flexible. Better to have someone
pay a lower interest rate or work
out a deal than have them walk away
and default completely. Even a few
percentage points knocked off your
interest rate can save you hundreds
of dollars, so summon up your nerve
and make that call.
5. Keep your creditors informed
If you have so many debts that you
cannot possibly work on paying them
off all at once, take the initiative
of writing letters to creditors
to explain your situation. Don't
give a big sob story; rather, clearly
and concisely explain your situation
and give them a realistic date that
you will begin repayment. The benefit
of this: most creditors will appreciate
your openness and will generally
treat you more nicely – you
won't be seen as hiding out
from them. Don't abuse this
though: honour your commitments
and start repayment when you say
you will.
|
