Credit Card Debts!!!
Question: Speaking of credit cards, we have too many of them and have STUPIDLY >used them too much. Now my husband and I have to try to figure out a >way get ourselves out of this mess that we have made…
Answer: First, make sure that you have your outstanding balances on a credit card that gets a good rate — around 7 or 8% should be possible. If you are paying 18-20% interest you are paying way too much. It should be pretty easy to transfer or consolidate all your outstanding bills onto one credit card with a low rate.
Next, figure out what the minimum monthly payment is. Make sure that each month you are paying off all the interest for that month plus at least some of the principle, otherwise you’ll just get deeper and deeper into debt. (Sometimes the minimum monthly payment is less than the interest, in which case, you should send in more each month).
If you can’t meet the minimum monthly payment, make up a budget. On one side list all your sources of monthly income (salary, tips). On the other side, list all your expenses (food, rent, taxes, etc.). See how much money you *can* devote to the monthly payment. If this is still less than the minimum monthly payment, call up your credit card company and explain the situation. Tell them you want to pay off your bill, but you can’t meet the minimum monthly payment. Explain your budget and tell them how much you can pay. In many cases they’ll be glad to negotiate — they’d rather get paid, more slowly, than not get paid at all. In any case make it clear that you are committed to do whatever it takes to pay your bill in full, including all interest charges, just as quickly as you can. If you are up front about this and explain your budget they are likely to be sympathetic.
If not, you have several other recourses:
* return some of the things that you bought. * sell off some of the things that you bought. You can probably live without them. Heck, people live on rice and water with only one bowl to their name. I’m not saying you should do this, just be real clear about the difference between “need” and “want.” * if you own your house, talk to your bank about a home equity loan, which you can use to pay off the credit cards; you may be able to get better interest rate on that or better payment terms. * Can you find someplace less expensive to live for a while?
I think that by being thrifty, clipping coupons, and counting pennies just about anyone with some steady income should be able to get back on the track to zero debt. It may take a while, but as long as you are making steady progress you’ll feel much better. Please email if you have any questions, and good luck…
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