Manage and Get Out of Credit Card Debt

Credit card use and credit card debt are two very different things but often the one leads to the other.

Before tackling debt built up on credit cards you need to change your attitude towards them.

Credit cards are useful enough to make them nigh on essential but you must only put items onto a card that you are sure you can pay for at the end of the month when the bill arrives. Putting items onto cards because you can't afford them is extremely dangerous and in some cases people can ruin any chance of financial security in their lifetime by doing this but you can dig yourself out if you take action.

Credit card companies have long tried to make people see risky financial decisions as good moves. Phrases like "buy today, pay tomorrow" have been repeated so much that people see credit cards as a nice, comfortable way to arrange their finances but "buy today, debt tomorrow" is the reality. For years companies have marketed to students and encouraged them to borrow and count on getting a well paid job at the end of their studies when it's more likely that the graduates will be hampered by the debt and miss out on opportunities.

The dream of living at a lavish level, spending thousands with only a hundred as the regular minimum repayment, is a scam. High interest rates, debt and even ruin are the reality. When you use a credit card to make a purchase you should be going through the motions of thinking carefully if the item can be paid for at the end of the month.

When you use a card and don't think the purchase through carefully you get a rush or a high because you're behaving recklessly. Your finances are far too important an aspect of your life to jeopardize them in the name of thrill seeking. If you make yourself go through a careful decision making process for each purchase then a lot of your urges to overspend will disappear.

Your first step to getting out of credit card debt and being able to use one for convenience is to view the card as another way to pay for things. Do not view it as a way to get what you want and dodge paying for it. If you don't pay for your items at the end of the month then you'll pay for them in interest, over and over and over again.

The bottom line is, use a credit card to pay not to borrow.

Getting your attitude to credit cards on the straight and narrow is vital and must be achieved before you even think about tackling the debt you have. With the wrong approach you could end up making your situation significantly worse.

Once armed with some healthy respect for the credit card you can begin the process of getting the debt you have under control and ultimately eliminating it.

If you've been putting items on a credit card because you can't afford them then it's not just your credit card use that needs modifying but your entire financial landscape.

Get a good overview of your finances. Use a pen and paper or a spreadsheet package to list your incoming funds, expenses and debts. This overview needs to be complete and accurate so it's important not to leave off irregular expenses or things you don't like admitting to.

Once you have everything mapped out you need to draw up a new budget which eliminates all non essential spending. Some of this non essential spending can be brought back after your debts have been paid off so you're not consigning yourself to lean living forever. If you really want to get credit card debt out of your life, however, then committing to some changes is essential.

Be clear in your own mind about what constitutes a non essential expense. What you need to live and work and be healthy is essential. Salon visits, TV channel subscriptions and cigarettes are not essential and in a debt busting budget they are not justified.

After cutting out the non essential expenses examine your necessities such as rent and bills and see where you can reduce the amounts you are paying. Downsizing your home, renegotiating utility bills and choosing more economical stores to buy food at are all good ways to reduce costs.

With spending reduced you then need to maximize incoming funds. Getting a job, if you do not already have one, working more hours, and starting a second job or business are all ways to increase income. Try to think of ways to weave saving and earning together. For example you could move in a lodger to increase cash flow and get the lodger to babysit for you while you go out and get extra work.

After completing these steps you will have a budget which can be put to the task of making repayments on your credit card debt. If you're still not going to have enough money to make repayments then consider taking out a loan. Take care that the loan has a lower interest rate than that accumulating on the credit debt and make sure you still budget and pay off the loan.

Organize carefully what you are going to put on your credit card during this time. Spending on the card should be as low as possible in order to avoid bumping up the interest payments you are going to be fighting against as you repay.

At this point you are ready to start making monthly repayments. Get in contact with the companies to whom you owe money. When a debt goes unpaid for a long time it can be sold on to another company and this adds an administration charge onto what you already owe. Let the company know that you are set up to start repaying the money, see if you can get the name of someone who you can talk to each time you need to. It's an advantage not to have to explain your situation from start to finish each time you need to ask a question or resolve an issue.

Right at the start the amount of interest facing you will be very sizeable and daunting. A good way to ease this difficult starting phase is to sell off some possessions. This will give you an increased fund for your first payments so that you can make a good impact and smooth the road ahead a little bit.

After this it's down to making monthly payments. Use the overview you made of your debts to apportion your repayment budget according to the interest you are clocking up on the amount owed.

Whilst it's good to pay off a little extra when you can afford it remember that there's no point in breaking yourself on one huge payment and having not enough to even make the minimum for the next month.

Keep a close eye on your bank account during the month leading up to your repayment. Pay checks can be delayed in clearing or bills can end up larger than you expected. Such things are every day occurrences but if you end up unable to make a repayment or, worse yet, make one which bounces, you will acquire charges and annoy your creditors.

If something goes wrong and you're going to miss a payment then call up the company sooner rather than later, explain and arrange to send over a small payment for that month rather than nothing. This approach will be reassuring to the company and make them more open to treating you sympathetically.

As you pay back what you owe the value of money will really be brought home to you. Paying off debt is a tough process and it teaches us the lesson that buying today and having debt tomorrow is not worth it.

As your debts get smaller you will be able to relax your spending a little bit. Treating yourself will feel much better when you don't need to feel guilty or worried about it.

After the struggle to pay back debt you won't want to return to your old spending habits. Hold on to some of your extra money and pay it into a savings account or secure investment. Enjoy your new secure financial life and remember that credit cards are useful to pay with but disastrous to borrow with.