Debt can be like a thief in the night except instead of tiptoeing into your house to seal your money, it steals your life. If you’re deeply in debt, you know exactly what I mean. You’re awake much of the night worrying about your credit card bills. You’re frustrated and scared. You may even have trouble concentrating on you job.
It’s not going away
Unfortunately, there’s no easy way to make debt go away. If you owe $10,000, $15,000 or more, you have only two real alternatives. You can find ways to pay it off or you could declare bankruptcy. Millions of Americans have done just that. But a bankruptcy can keep you from buying a house or a car for several years and will stay in your credit report for 10 years. Bankruptcies are a public record so that anyone, including potential employers, could see that you had one. Some companies won’t hire people who have had a bankruptcy as they feel this reflects badly on their character.
Earn more income
The first thing you can do is to find ways to earn extra income and use it to pay down your credit card debt. You might take a part-time job, tutor children, become a nanny, sell items on eBay or Craigslist or maybe take a second shift at your current job. We know of one woman who hosted “passion parties” and used the money she earned from them to help pay down her credit cards.
Transfer your balances
This same woman got three new 0% interest balance transfer credit cards and used each one to pay off one third of her original credit card debts. Since these cards were interest-free, the payments she made helped pay down her balances fairly quickly and saved her money because when interest rates did kick in, they were lower than what she had been paying. However, there is a key to making this work and that is you need to have enough self-discipline to put no charges on the new cards.
“Snowball” your credit card debt
Another good way to pay down credit card debt is to use the tactic called “snowballing.” The way this works is that you first pay off the credit card that has the highest interest rate while still making the minimum monthly payments on your other cards. When you reach a zero balance on that credit card, take the money you’ve been paying on it and use it to pay off the card with the next highest interest rate and so on. An alternative to this is to pay off the card with the lowest balance first then the one with the second lowest balance, etc. This has proven to be a very effective way to handle credit card debt for many people because it makes it easier to see you’re making real progress towards becoming debt free.
Refinance your house
If you own a home, you could refinance your mortgage and use the money to pay down your credit card debts. I read the other day that most people have mortgages with interest rates of 5% or higher. Since you should be able to get one today at 3.5% or better, you could do a refi and use the savings to help pay down your debts. For example, if you have a $200,000 mortgage at 5% and refinance of 3.5%, you could save about $120 a month and use it to pay down your debt. If you’ve been in your home 10 years or longer, you may have enough equity that you could get a second mortgage and completely pay off your credit cards.
If none of these work
If you don’t feel that any of these tips will help you get out of credit card debt, let us help. Our debt counselors have helped many American families become debt free in 24 to 48 months by settling their debts, often for half of what they owed. Call our toll-free number today to learn more about debt settlement and specifically how it could help you. We charge no upfront fees so you have nothing to lose by letting us try to help get you out of credit card debt.