Tips for Eliminating Credit Card Debt

Are you one of the millions of people that are battling with their seemingly insurmountable debt? You aren't alone! According to a recent poll, the average American owes $2,900 in credit card debt alone. Last year, over a million households filed for bankruptcy. But it isn't hopeless. Here are a few tips to help you in eliminating your debt. You don't have to be a part of that grim statistic.

First and foremost, don't spend money that you don't have. That is a recipe for financial disaster. The average American family spends 22% more than it earns. In reality you need to spend a good deal LESS than you earn. And many people wonder where the money goes? If you have a large amount of credit card debt, stop using the cards. Cut them up if you have to. Or keep the cards and only use them for emergencies. Cut down spending and apply your savings to the debt you've accumulated. While your shopping categorize your "wants' and "needs." If an item falls into the want category, put off buying it. If you really need the item, try to find a less expensive alternative. Cut out nonessentials like restaurants, theaters, and other money sucking outings. The saving does add up.

Secondly, use cash to pay for all of your retail purchases! Studies have shown that people tend to overspend when they use credit cards versus cash so stop that cycle now. Create a budget and allocate a certain amount of money each month for retail purchases (clothes, toys, etc...). It is also a good idea to use cash for food purchases. That way you are more aware of what you're paying for when loading up that cart with high priced snacks and name brand food items. Take that cash out of the bank account and when it's gone, it's gone. DO NOT GE T MORE CASH OUT! Wait until the month is up and then refresh the cash amount.

Next, gather all of the information you need and make up a spreadsheet (or a simple list) for all of the creditors you owe. This was a big eye-opener for me as I'm sure it will be for many. I found out that I was in way over my head and needed to stop my spending habits. Perhaps this will be the case with you as well, but for many getting organized and becoming aware of your cumulative debt relieves some pressure. Perhaps it isn't as bad as you first thought. Regardless, ignorance is not bliss. You need to be aware of where you stand financially so that you can begin to climb your way out of the muck. Also, take a look at www.freecreditreport.com or www.annualcreditreport.com to get a list of all of your current creditors free of charge from the three major credit reporting agencies.

With this list, now you can move on to calling your creditors and negotiating. Many don't realize it, but you can call your creditors and make some headway in eliminating debt. Ask creditors to lower interest rates, waive annual fees, and even remove late charges. Credit card companies will often times lower your interest rate on the spot because they don't want to lose your business. And those annual fees do not have to continue on forever. While on the phone explain your debt situation and your inability to meet the creditor's current obligations. Most creditors are understanding and prefer to create a fresh payment plan for you versus enlisting a collection agency's help or writing the debt off as a loss. This keeps your credit report free of any negative remarks as well since the fresh deal you've negotiated keeps everyone happy (as long as your meet the new payment obligations).

Lastly, always pay more than the minimum due on your credit cards! Pay at least three times the minimum due if you can afford to. Typically, credit card companies only ask you to pay two percent of your balance. If you only make the minimum payments, you'll never get out of debt. Minimum payments mean maximum payments in the long run. Once you have your debt paid down, don't use your card again unless you have the money to pay the balance off immediately.