For years, homeowners have turned to second mortgages or equity credit lines against their home’s value to raise money to pay off debt. Excessive use of equity lines caused many to lose their homes in foreclosure when homes prices began declining in 2008.
Understand Your Credit Card Debt
Do you know why you have so much debt? You may know the exact reason if the debt was caused by illness or injury or you were forced to use credit cards for daily expenses when you lost a job.
If your debt is a result of an unusual circumstance and you are no longer adding more debt you are ready to attack your debt load.
If you look at your credit bills and wonder where those balances came from, you need to look at what you’ve purchased to learn why your debt is now crushing you. There is a syndrome in the credit card industry that is referred to “credit creep”.
This is the credit balance that seems to be a bit higher every month though you can’t remember what you purchased. It’s a funny name but points to a serious financial problem.
If you’ve suffered from credit creep you may need help in learning to handle your finances. The first step is putting the cards away and not adding more debt.
This is hard if you are a person who uses his cards frequently for small purchases but it is necessary if you want to
take charge of your debt.
Reduce Your Expenses
It’s time for some serious belt tightening. Gather your monthly bills. Examine each bill to find ways to decrease the amount you pay monthly for that service. You will be amazed at how much money you might find when you look closely at your monthly expenses.
Keep a running total of the dollar savings you find. Believe me, the small expenses are crucial! Change the thermostat setting to 65 degrees in winter and 78 degrees in summer.
If you are chilled, put on a sweater or two. Use small fans to circulate the cooled air on warm days. Turn off lights when you leave a room. If you have a washer and dryer use them only with a full load of clothes.
Cut back to the basic cable TV package. Do the same with your cell phone plan. Those actions alone can save over $100 a month. Look at how much you have spent on entertainment in the past three months.
This includes meals out, bars, fast food, movie theaters and concerts. Don’t forget computer games purchased CDs and DVDs and those rushed trips to Blockbuster.
Shop for food no more than once a week and plan meals based on the weekly specials offered by local markets. Many of us are accustomed to buying certain brands of household items and to buying on impulse as we cruise the grocery aisles.
Compete with yourself to see how much you can save each week. Generic brands can be cheaper and are especially good for paper towels and other disposable items.
Attacking Your Credit Card Debt
Put your credit cards away. You cannot eliminate debt if you are adding more debt.
Reduce any expense you can to barest minimum and use that saved money to apply to your debt. You must pay more than the minimum each month to conquer the debt.
If you have more than one credit card begin by paying every cent of money you can save in other areas to the card with the highest interest rate.
When that account is paid in full apply all of that monthly payment along with the minimum payment of your second credit card and pay off that second debt even faster.
When you have paid off all of your debt you will have a great feeling of accomplishment and will have gained valuable money management skills. Focusing on paying the maximum amount you can each month is the answer on how to escape credit card debt if you don’t own your home.