Dig Yourself Out Of Credit Card Debt

by : Joseph Kenny

Many millions of British people have financed their financial future over Christmas last year. They have put hundreds or even thousands of pounds onto their credit cards in just a few weeks.

On average, around 200 each more than the same period the previous year. Many people in the UK now carry credit card balances equalling a year's salary. On top of this, huge numbers made little attempt to pay off the balance. Opting instead to pay the minimum balance requirements of each month.

This can be a slow and painful financial death by credit card payments. There is no reason why you should not get a grip of the situation and turn it around to make your credit card debt more reasonable.

The economy is slowing down, the housing market is in a bad way and unemployment is slipping ever higher. So now is the time to try to reduce your credit card debts, if not even eliminating them altogether.

There are several steps take to help yourself onto the ladder that will eventually allow you climb out of any credit card debt problems you may have.
The first rung of this debt clearing ladder is to create a budget. This sounds a little daunting, but it really isn't that difficult. Most people who have money problems also do not have a budget; this simple tactic can change your financial situation.

You need to get all your paperwork and bills together to work out how much you actually are spending every month. And also how much of that actual inescapable expenses. And just what things that you can cut down on or eliminate.

First of all calculate your expenses that come in every month, such things as car payments, credit card payments electricity bills and so on. The next thing to do is work out exactly how much your household income is per month.

Unfortunately, you may well find like millions of people in the UK that the amount that comes is actually lower than the amount that is going out. This should not come as a surprise as this is the reason why your credit card debt is increasing each month. So, you will need to make cuts, figure out what you actually need to keep and what are the things that you can live without. This may not be big items it may only be regular small items.

For example, do you always stop at the coffee shop on the way into work every morning and pick up a cup of coffee. Just think how much that adds up too five days a week. How much is that month? How much is that year? It is not hard to figure out where a lot of your money is going. If you repeat this exercise, with everything that you spend it may give you an idea what you can cut back on.

Your grandmother probably used to have envelopes with cash in them, one for the gas bill. One for the catalogue man, one for the milkman and so on. This was a good way to budget, in her day and it still is today. It's a simple system that helps you to know exactly how much spare money you have available.

Start using your credit cards sensibly; it is not good idea to start pulling out credit card every time you don't have sufficient cash to pay something. Credit cards are not free they have to be repaid. Many people seem to be under the impression that if they put payments on plastic in never has to be repaid.

You should start to consider your credit card as a useful tool to help you to budget each month. Not an excuse to spend money that you don't have, you could freeze your cards for a month or two. This is a simple exercise, take the cards out of your wallet place on them in an envelope, seal it up with a date on the outside and don't open it up before that date.

Start paying off your cards. To do this obtain exact balance for every card find either the one of the highest rates of interest or one with the lowest balance. Concentrate on playing that card off, only pay the minimum on all your other cards until that card is paid off, and then do the same the next card, and so on.

If you have sufficient income, and you can afford to make more than the minimum payment on more than one card that will make a significant difference to the balance.

If you pay the minimum on the card each month, how long do you think it will take you to pay off the entire balance? A year? Three years? In fact, the average length of time to pay off a credit card debt by paying the minimum is 18 years. That equals a shockingly large amount of interest, so that is something you need to consider next time you think that it's a good idea to just pay the minimum this month.

Another option is a debt consolidation loan that will pay off all of your cards leaving just one simple monthly payment spread over a number of years. This will save you a huge amount of interest and will also actually cost a lot less per month, allowing you to repair your finances.

Credit card debts and not the end of the world is possible to fight back and resolve your problems, it takes determination and hard work, but it can be done