By Robert G. Knechtel
Studies show that a majority of the population at some time will have a problem with credit card debt. Today, many people find themselves drowning in credit card obligations with available balances close to the maximum and unable to make more than the minimum payments at atrocious interest rates just to keep afloat.
If you find yourself in this predicament, there are some practical things to do and think about which will enable you, over time, to eliminate your credit card debt and move on to live an abundant life. Many of these suggestions will seem radical, given the fact that we often find ourselves addicted to buying on credit and remaining comfortably vague about how much we actually owe, and what our debt is actually costing us.
Assuming you are at the end of your rope and losing sleep, here's what to do:
1. Stop using credit today! Yes, it can be done. Go on a cash basis. Do not panic. Many people decide to cut up their credit cards or, at a minimum, put them in the back of their freezer.
2. Begin keeping a record of all money you spend. Use a little notebook and write down everything, yes everything, from latte's to tolls to snacks.
3. After a month, total all of your expenditures. Break them down into categories such as rent or mortgage, clothing, car, utilities, food in, food out, nails, payments against your credit cards and so on. You probably will discover some surprises.
4. Closely examine all of your actual expenses and, on paper, begin cutting out those that are not absolutely necessary and reducing others that are out of line. Be willing to overcome your vagueness. Be pragmatic and ruthless.
5. From the results of your analysis, prepare a monthly spending plan, using your categories, that falls within your income and allows you to make larger payments against your credit cards.
6. Begin reducing your credit card debt by paying as much as your spending plan allows, above the minimum monthly payment, toward the smallest of all your credit card obligations. In the meantime continue making minimum payments against the other credit card balances.
7. When the smallest amount owed has been paid in full, begin applying the extra cash to paying off the next smallest balance. Repeat this process until all credit card debt has been eliminated. Yes, it will take time.
8. Use cash, checks or a debit card to make grocery, clothing and similar purchases. Write down each of these expenditures in your little notebook. If necessary, you can buy airline tickets and rent cars with a debit card.
9. Continue keeping a monthly tally of all your expenses in order to make sure you are keeping to your spending plan. Hold yourself accountable, if you can, by discussing your situation and progress with someone you trust or a spiritual advisor.
10. Above all, do not take on any new debt. Try paying all bills the moment you receive them. Touch them once. Don't allow them to accumulate. That way you have no unpaid bills.
A word about your spending plan. You do not have to fall on your sword to take care of your creditors. Make allowance for taking care of yourself. Include spending categories for entertainment and self care. Self care also must include a savings account if you don't have one. You should begin from day one of this plan to establish a prudent reserve. Each week, make a contribution to savings. Can you afford $5.00 per week? Or more? Include it in your spending plan.
Nothing will contribute to your sense of well being more than responsibly handling your debts and building for your future. You can eliminate your credit card debt by following the straightforward plan outlined above.
About the Author: Robert G. Knechtel operates several websites, including CreditCardSanity.Com – How to Use Credit Cards Sanely and Taxchronicle.Com – Understanding Federal and State Taxes.
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