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Debt is a frustrating thing. It can get out of control so easily at times, yet other times it’s so utterly vital. How else would most people buy a home or a car?

But most people don’t have debt spiral out of control just due to one or another of those. They can indeed buy more house than they can afford, and agree to a risky mortgage scheme, then lose the gamble, or perhaps get into money trouble from a job loss, but many people get into uncontrollable debt just due to their credit cards.

Credit card debt is painful. It’s expensive. It can feel like a trap. And it can be very hard to get out of.

But you can get out of debt, and in many cases you won’t need to file bankruptcy or consolidate your debts. Sometimes those can’t be avoided, but often you can do it on your own with sheer determination.

Start by calling your credit card companies and seeing who will lower your interest rates. The lower you can get your interest rates, the better.

Next, take all but one out of your wallet and put them away. Most people find it too inconvenient to give up the convenience of credit cards, and so I won’t expect that of you.

But you do need to get your spending habits under control. As much as possible, pay cash. A lot of people find it helpful to budget using envelopes of cash, and taking that when they go shopping. You can’t go over budget if that’s all you have available.

Now pick a credit card to pay off. Some people pick the highest balance, others the highest interest rate. What’s important, however, is that you focus your energies on paying off that one card.

Pay just the minimum on all your other credit cards. But on the one you’re trying to pay off, pay as much as you can reasonably manage.

What? You can’t manage more than the minimum on any of your credit cards? You’re in deep.

But it’s still not impossible. What this means is that you are living beyond your means. You need to cut back.

Way back.

Let’s get real here. Cable television is a nice convenience. It is not a necessity of living. If you’re having trouble paying your bills, cut it out.

Ditto internet. You’ll have to rely on the computers in the library or go with the cheapest dialup connection you can get. Not fun, but doable.

Cell phone. Regular phone. Do you really need two?

What’s your favorite place to stop and get something to eat or drink? Are you doing that too much?

Are you eating out too much period? You can bring lunch to work, you know.

Keep looking for cuts like that to make to your budget. If you can simplify your way of life you stand a better chance of getting your debts back under control. You’ll feel much better for it.

Technorati Tags: uncontrollable debt, debt management, paying off credit cards, debts

Building healthy money habits is tough, especially if you have old credit card debts to pay off. It can be a very frustrating cycle to go through as you try to bring your finances up to where you would like them to be.

But getting rid of credit card debt is one of the best things you can do for your personal finances. And the article I’ve linked to gives a very basic example of why you should do more than make your minimum payments whenever possible. It doesn’t take any but the most basic of factors into consideration, but the principle of their calculations is sound.

As they say, even paying back a little extra each month will make a difference in the long haul. It may not seem like a big difference, but especially if you are paying interest the difference will be huge. Read the article if you need to know more details about it.

Sometimes your financial needs will get you to where you are considering debt consolidation. There are advantages and disadvantages to this. The advantage of course is that your monthly payments will be smaller. This can be a huge help when you’re really struggling.

The disadvantage comes into play with the typically higher intersest rates and longer loan terms. Consolidated debts generally cost you a lot more money overall. But when you need the help, it can be the best option.

Of course there are other things you should work on first with your personal finances. Work out a good budget. See if you can live on your current income or if you need to make serious cuts. Figure out what’s working for you and what is making things worse. If you can work these things out before needing debt consolidation, so much the better for you overall.

When credit card bills get out of hand, it can be very tempting to declare bankruptcy and just start fresh. It sounds so much better to be free of debt. However, bankruptcy is generally not that good an option. Paying off your debts in many cases will be a better choice.

That’s not to say bankruptcy is never the right choice. Some life events do leave you in a position where paying it all off is quite simply impossible. But that shouldn’t happen if the debts are due to what more or less amounts to deliberate overspending. Bankruptcy is more reasonable in cases involving high medical bills and other crises where there was no way to avoid high debt.

When the time comes to fight your way out of debt, you must be determined. You have to tell yourself that you will get your finances under control. You will pay those debts down. You will learn to control your spending.

And that’s the key. If you don’t change your spending habits, getting out of debt can be next to impossible. Even bankruptcy won’t be a permanent solution if you don’t learn good spending habits. Read the rest of this entry »

Being in a large amount of debt is painful. The interest rates add up fast and making payments can make it difficult to scrape together enough money that you don’t have to charge more on your credit cards.
Debt consolidation sounds like a wonderful solution in such a situation. Lower payments. A lower interest rate. The ability to make payments without suffering so much financially.

The trouble with debt consolidation is that it doesn’t address the core of the problem. If you haven’t changed your spending habits you are too likely to just charge those credit cards back up again and make the problem worse.

This means that if you decide to go for debt consolidation it will be a wise idea to close those credit card accounts you are clearing up. If necessary you could keep one open for emergencies, but make it hard to use so that you are not tempted to have fun with it.

As you look at debt consolidation, don’t focus just on the lower payments. Think about how much more it will cost you. Even with a lower interest rate, debt consolidation can often make you pay more in the long run because you’re paying interest for a longer period of time. Read the rest of this entry »