5 Things You Must Do If You Need Help With Credit Card Debt
The best free debt advice you’ll ever get!
I’ve decided to create a list to take the confusion away for those looking for help with their credit card debt.
The top 5 things you MUST do to get out of debt faster.
1. CALL YOUR CREDITORS
While this may seem incredibly obvious, I am constantly surprised at how many people haven’t taken the time to call up their creditors and tell them about their situation. The number one thing you want to ask is, “Based on my payment history, am I eligible for a better interest rate?”
As my mom used to say, “The squeaky wheel, gets the oil.” You may be eligible for a better interest rate, and often all you have to do is ask. It doesn’t hurt to try! If your creditor says yes, GREAT! If not, all you lost was a phone call.
2. DO A BUDGET
By far this is the most overlooked AND most important step of getting help. Most peopl avoid doing this because they often don’t want to see their situation on paper, and/or they think they don’t have the time. GIVE ME A BREAK! You don’t have time not to do this…the quicker you get a hold of your finances the sooner you stop working just to pay your credit cards. MAKE the time. Their are all kinds of free budget worksheets online, and I hvae one included in the Free Debt Workbook on my site. DO THIS STEP!
3. PUT TOGETHER A LIST
Once you’ve gotten an idea of where your money is going, and how much you are currently spending on your debts, you needs to put together a list of WHO you owe and EXACTLY HOW MUCH you owe them. You can’t get out of debt if you don’t know where you are starting.
4. RESEARCH YOUR OPTIONS
There is a lot of confusion as to what debt programs are out there, and which is best for your situation. For most people their are only 2 options.
One option is Consumer Credit Counseling, which is often mistakenly called debt consolidation.
Consumer Credit Counseling is for those who can afford their minimum payments for at least the next 5 years AND have high interest rates on their credit cards. These companies charge you a monthly fee and they help lower your interest rates. THEY DO NOT LOWER YOUR MONTHLY PAYMENTS significantly, if at all. A common misconception is that because you are staying current with your creditors, these programs are good for your credit. In reality you will not be getting lending while you are in a Consumer Credit Counseling program.
The other option for most is Debt Settlement.
A debt settlement program is a program in which you save up money, and have a company negotiate your debts with your creditors. A good settlement company will get you out of debt for about half of what you currently owe including their fees. Example: You owe $100,000 dollars. The settlement company will get you out for a total cost of about $55,000 dollars.
These programs hurt your credit while you are in the program, and are for those who are already behind, or those that know they can’t pay their minimums for the next 5 years. I happen to be a manager at a settlement company, and I can tell you, not all settlement companies are created equally. Do your research on the company BEFORE joining. They should be members of TASC, and they should have a good BBB rating.
5. CHOOSE A PROGRAM IF YOU NEED ONE
If you’ve done the first 4 steps, this one should be pretty easy.
Look at your budget from step 2, and see how much you can afford to put towards your debt. then compare that with the quotes you got from step 4.
A general rule of thumb is, if you can pay your creditors for the next 5 years, then a CCC program might be better for you than a settlement program. If you are already behind, and can’t afford your minimums, you should be looking at a settlement program before you even consider a bankruptcy.
