Are Credit Cards Killing Your Budget?

by : Jude Wright

Credit cards can get you in trouble financially faster than you can say, "I want a credit card." Many people get in over their heads within just a few weeks or months.

If you are having trouble paying your credit card bills and are getting "failure to pay" notices, you might be starting panic. Well, don't panic yet. There are some things that you can do right away to get your finances back in order.

First, you should realize that you're not alone. There are more people in trouble with credit cards than there are those who are not. So, don't feel so embarrassed by the situation that you hide it from everyone - including yourself. Face it and deal with it and you've taken a good step to helping the situation.

Here are a few tips to help you deal with your credit card debt:

Create a Budget. Creating a budget is the first, critical step you must take to get your spending under control. Write down how much money you are taking in from your salary and other sources.

Then, decide on your absolute, must have expenses for day-to-day necessities. These expenses will include food, housing, transportation to and from work, and health-related expenses. The money that you have left should be put to work towards paying off your credit cards and other bills.

Contact Your Creditors. This is an important step to take, especially if you know you can't pay all your bills with the income that you have coming in. Remember that you can't hide from your creditors. It will only make things worse. If you contact them immediately, they will be more likely to work with you to create a payment schedule that is easier for you to follow than if you wait until they've contacted you numerous times trying to get payment. The one thing that you don't want them to do is to turn your account over to a collection agency.

Dealing with Collection Agencies. If the credit card company has already hired a collection agency to get their payments, you must deal with that too.

Many collection agencies will hound you at work or at night with threats about what will happen if you don't pay. Some of these threats are just scare tactics. There is a federal law, the Fair Debt Collection Practices Act, that governs the actions of collection agencies. Basically, the law says that they can't call you at work or at times when you would normally be sleeping. It also says that they cannot make threats, especially untrue threats, that they will take your car, house or other assets.

Credit Counseling. There are non-profit companies that have been created to help people who are in financial trouble. These companies will help you set up a budget and create a payment plan that will get you on the road to paying off your debts. Many of these will help you contact your creditors and mediate with them on your debt repayment schedule. Be sure that the company you deal with is legitimate or you could end up losing more money than you can afford.

Bankruptcy. Bankruptcy should be your last resort. Try everything you possibly can to pay off your debts without going this route. If you declare bankruptcy, it will remain on your credit report for many years making it difficult for you to get financing to buy a home or for other emergency funds in the future.

Don't wait until you are so mired in debt that it's impossible to get out. Begin right now and don't give up until you are feeling comfortable that you are meeting your obligations without difficulty. You CAN do it!