If you’re up to your neck in debt, do you know what your lenders such as the credit card companies think of you? They think that you’re just irresponsible and don’t know how to handle credit. However, I have seen studies recently that tell a different story. The Federal Reserve Board has reported that US wages have stayed flat since 2001 even after adjustments for inflation. On the other hand, basics such as medical care, food, housing and other household essentials have increased And in some cases, they’ve increased dramatically. What this boils down to is that not everyone in the US is in debt because they can’t handle credit. It’s that we’ve all taken a sort of pay cut.
Take action
It doesn’t matter whether you’re having a problem with debt because you didn’t handle your credit cards responsibly or because you were a victim of the great recession. What matters is taking action. This begins by comparing how much you spend each month to your total monthly income. You will probably be shocked at the results as you will undoubtedly find you’re spending a lot more than you earn, which is why you’re having problems with credit card debt.
Create a budget
Actually, you don’t need to know just the total amount of what you’re spending each month. You need to know how you’re spending your money. This means tracking your spending for probably a month, and, by this, I mean writing down everything you spend money on, right down to that yogurt you bought for dessert last night. You next need to divide your spending into logical categories such as food, entertainment, clothing, medical bills, transportation, eating out and so on. This information will help you determine those areas where you can make cuts and reduce your spending to less than what you earn. In fact, you should budget to spend at least several hundred dollars less than you earn so that you can begin either saving or paying down your debts.
”Snowball” your credit card debts
Once you get your spending under control, your next step is to start doing something to whip those credit card debts into shape. One way to do this is called “snowballing” them. The way you do this is by doubling up on your payments to the credit card with the highest interest rate, while continuing to make the required minimum monthly payments on the other cards. When you get this first card paid off, you can then use the money that has been freed up to start paying down the card with the second highest interest rate and so on.
Borrow from your retirement fund
The best way by far to borrow money is from yourself. There are two ways you could do this. First, if you have a 401(k) or IRA, you could borrow money from it. As a general rule, you can borrow $50,000 or one half of your 401(k), depending on which is less. You can take as long as five years to pay back the money and the money you would be paying back would be to yourself and not to some financial institution. How cool would that be?
Borrow from your life insurance
If you have what’s called a whole life policy, it will have a cash value. If you’ve had the policy for some time, it may have a high enough cash value that you could borrow from it to pay off your credit card debts. With life insurance, unlike a 401(k), you can just take your time paying back the money or not pay it back at all. Of course, if you were to die without paying the money back, your heirs would not get the money you had borrowed.
Debt relief done our way
We’ve helped thousands of American families get credit card debt relief through an option called debt settlement or debt negotiation. Our experienced debt counselors could contact your credit card companies and negotiate settlements, probably for thousands of dollars less than you owe. Call our toll-free number today or fill in the form you’ll find on this page and let us explain debt settlement and how we could probably help you become debt free in 24 to 48 months. We think you’ll agree it’s a really great credit card debt relief option.