Credit card debt is a big problem. Credit cards themselves aren't so bad, but when you only pay the minimum balance and charge more than you can afford, the total balance will build up fast. Eventually, the interest alone will be so much that you can't even afford to pay the minimum payments.
Whether you can't make the payments or you are just getting by, eliminating the debt as soon as possible is the most important thing you can do. Eliminating your credit card debt without damaging your credit is difficult, but it can be done. Maintaining a good credit rating is very important. Your credit may affect whether or not you can get a mortgage, auto loan, personal loan, credit cards, jobs, etc. It also will affect the interest rate of any loan you are able to get. If you have a lot of debt, your credit may or may not be damaged.
If you always pay at least the minimum payment on time and your debt to credit ratio is low, you probably have good credit. However, continuing down the road you are on is not a good sign. Getting rid of the debt now will help ensure that your credit doesn't get worse. If you already have bad credit because of your poor credit charging choices, paying off your debt with the following method will not only keep your credit from getting worse, it will improve your credit.
You have to do it the hard way if you want to keep your credit intact and improve it. This is the best way to improve your credit, get rid of debt, and pay less interest overall. You'll also learn excellent financial habits that will benefit you in future. The hard way to get rid of debt is to pay it all back. Your debt will continue to earn interest over time, which will make it a little tough and more frustrating, but it's not impossible and it's worth it in the end.
First and foremost, get rid of all your credit cards. Don't close any of the accounts, just stop using the cards. If you have excessive debt, you don't know how to use credit cards wisely. You are not allowed to use them from now on. Adding more debt to your cards will work against you. Get rid of them and use cash.
Add up all your credit card debt to determine the total amount of debt you need to pay off. Set up a plan for repayment. The best plan of action is to pay the minimum balance on each credit card first. Then, take all the extra money you have each month and put it toward the card with the highest interest rate. Once that card is paid off, put all the extra money toward the card with the next highest rate and so on.
If you find a credit card with a zero balance transfer for the first 12 months, that might help if you can pay off your debt within a year. It could work because you're interest won't be working against you. However, if you have bad credit, you might not be approved, and in either case, a new credit card might hurt you if you're tempted to use it. Think about it carefully first. If you don't trust yourself, stay away. Continue paying down the minimum balance and as much extra as possible until 100% of your credit card debt is paid off.
What if you can barely meet your minimum payments? How can you pay extra and get ahead? Chances are if you're in credit card debt, you're spending money frivolously. Even if it's just an extra a month, that's that can be going toward your debt.
Learn how to budget and make sacrifices. Budgeting will force you to see exactly where your money is going each month. Until your debt is paid off, you need to make sacrifices. If you have an excessive amount of debt and/or can't meet your minimum payments, those sacrifices will need to be extreme such as cutting out completely all entertainment like cable, Netflix, eating out, going to the movies, going to shows, and all other nonessential entertainment that isn't free. Clothes, coffee, fast food, data packages and texting phone plans, and vacations must all be postponed until the debt is paid off.
There are probably lots of expenses you have every month that don't fit into these categories. You might need to sell your car and get something cheaper, downgrade your house or apartment, etc. Get rid of everything that isn't essential for living or your job. Learn how to live frugally at the grocery store, how to save gas, and how to take advantage of free entertainment.
Also, find ways to increase your income. If you cut out all your entertainment expenses, you probably have a lot more time on your hands. Get a part time job or start a business. If you can't downgrade your home, rent out a room or two. Be creative and find ways to supplement your income.
If you're debt isn't so out of control, you might not need to sacrifice as much, but if you do, you'll pay off your debt much faster. Make the changes you need and when the debt is gone, you'll find a huge amount of income leftover each month you can divide up among some of the costs you cut and savings for future goals such as buying a house or retiring.
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