Debt especially credit card debt is one of the leading causes of financial problems; thus, it should be paid when one is broke.
It is very stressful to be in credit card debt which means that you can hardly make extra money or pay a certain amount every other month on the debt. However, even if you feel like you are in a really bad financial position, you should know that there are ways through which you approach your credit card balances. Below, you will find detailed information on how to begin repaying credit card debt when you can barely contribute any extra cash every month.
Check Your Financial Position Before Applying
First of all, you need to compile the total of all the credit card debts that you have across the different cards available to determine the total debt that you have and the interest rates that are charged on each card. You should also write down all your balances and APRs so that you make a quick check of any that might be missing.
Then take a look at the cash flow analysis of the monthly income and expenditure on basic needs such as housing, transport, food, light bills, baby needs, insurance, etc. How much money is left after all the expenses have been paid? Another $20 or $50 which you never thought of as necessary might go towards credit card bills.
These are some of the recommendations that can be made when it comes to increasing sales and thus cash flow:
If your basic expenses equal or exceed your income each month, you have four options to free up some extra cash that can then be put towards credit card debt: for instance, one can cut on expenses, increase income, use transfer credit cards, or other options such as consolidation loans or hardship plans.
Spend Less
Here are some areas you can cut back on each month to find extra money in your budget for credit card payments:
- Where necessary, determine what is necessary and what is a want and work towards cutting down on expenses like eating out, entertainment, hobbies, subscriptions, memberships, etc.
- Contact service providers such as cell phone /TV/internet, and insurance to see if they can lower bills which seem high monthly
- One, one can decide to look for another cheaper house or apartment or decide to live with someone else.
- Shop only at the grocery store for generics & reduce the wastage of foods
- Spend less wherever possible, buy clothes, and other used products where it is possible, and avoid buying things in the first place by seeking to borrow them.
Don’t drive your automobile; rather, walk, ride a bike, or take public transportation to avoid paying for fuel and parking.
Increase Income
If you take on additional work, the extra earnings can all be directed straight towards credit card debt:
- Take extra hours at work or get a second job for instance through Uber or Lyft, Postmates or Grubhub, freelancing, or pet-sitting- Facebook marketplace, Craigslist, eBay, and other platforms contain pre-owned that you can sell if they are idle in your home.
- Use the extra room or rooms in your home by listing them on Airbnb, Vrbo, or having a long-term house or apartment mate
Balance Transfer Credit Cards
The balance transfer credit cards come with a 0% introductory APR of between 12-21 months in most cases. If you are carrying a balance transfer from a high APR credit card and you transfer it to one of these cards, you can enjoy the benefit of having no interest charges for more than a year which means the entire amount that you pay goes into paying the principal balance. There is always the problem with balance transfer fees which range between 3 to 5 percent of the amount that was transferred.
Consolidation of Loans or Debt Crisis Management
Credit counseling agencies are non-profit organizations that you can consult to have all your many credit card payments combined into just one monthly payment of less amount. They also have the responsibility of reaching out to creditors with a view of explaining your situation and coming to an agreement with them. Credit card company hardship programs are those initiated by the credit card companies themselves which provide additional help to those with financial troubles, for instance by setting a lower interest rate for a given period.
Automate Payments
Visit the websites of your credit card companies and link your checking account so that you can have the bare minimum payment and even more if you can afford it, debited from it every month. This helps one avoid making late payments that attract higher fees in the form of late fees by the credit card company and extra APRs.
Prioritizing debt, one should try not to pay only the bare minimum amount required on the credit card bill.
rolling balances around or keeping balances around means keeping credit card balances because paying only keeps interest going because a small portion is paid towards the principal amount. Make an effort to pay more than the minimum amount due, even if it can only be done by 5 or $10 more if at all possible. The worst thing that applies with each meeting is that each bit leaves a difference over time. Pay or make arrangements for higher-level payments automatically or pay them manually only after clearing them from saved money by reducing the budget or getting extra cash.
The choice between the Avalanche and Snowball Payoff Methods
The snowball method is an ideal method of paying off credit cards because all the remaining money is put towards the balance with the highest interest rate while paying only the minimum balances on the other accounts. The debt snowball method enables those who apply it to focus on early victories that enable making balances in full beginning with the lowest balances regardless of the interest rates. Finally, do whichever makes you keep on track and full of drive.
Ask Creditors For Help
Contact each of your credit card company’s customer service divisions, tell them that you have been experiencing difficulties paying your bills, and ask for a lower interest rate or a smaller minimum payment. Ensure that you have developed it in a manner that shows that you are willing to meet your obligations and that having a lower monthly payment would facilitate this. In law, creditors are bound to engage consumers having hardships in paying for their debts and several of them will offer help to avoid such cases. If one of them does not agree, be polite and continue to address other companies for assistance.
Difficult Struggles and the Debt Management Programs
There are credit counseling organizations that are non-profit, for instance, the NFCC provides debt management plans that can enable you to make a single payment for your many debts, and the organizations negotiate for lower interest rates on the credit on behalf of the client. Creditors make adjustments to those who suffer through stress if the tools would assist them in maintaining the flow of payments. Another source of hardship programs is directly through the credit card companies and they also offer specialized help.
Debt Settlement
Debt settlement involves dealing with your creditors and paying them less than what you owe; however, this has a tremendously bad impact on the credit rating. A debt settlement program requires some level of commitment in terms of monthly payments to an escrow account and negotiations only begin after one has saved enough money which is usually half of the amount owed, which might take several months or years in cases of large debts.
Bankruptcy
Personal bankruptcy wipes out most forms of unsecured debts and gives the person a fresh start; people no longer receive phone calls, letters, or visits from creditors, bills to pay; and if someone has large credit card balances, they get significant relief. But, the thing is that filing for bankruptcy seriously affects credit scores for the following 7-10 years and this means that everything, starting from purchasing a home, renting an apartment, taking necessary loans, or even being hired for specific jobs, becomes more difficult. Consult with a lawyer to see if bankruptcy may be possible for your circumstances or if these other options provide superior, less costly, longer-term debt relief.
The Road Ahead
Nevertheless, it is important to adhere to the financial plan and personal goals when employing any of the above-stated debt pay-off methods. It just means that even when you start feeling like you are stuck, you are just on that cycle of consistent and gradual progress. No more accumulating any forms of consumer debts in the future as this means all the extra income can be used to pay off credit card balances. Keeping abreast of your credit reports and scores is important so that you know how your changes affect your creditworthiness and standing in the credit market. This message from the company, coupled with the company’s performance of ‘‘Reach for the Freedom’’ is indicative that debt freedom is achievable when people work hard and practice diligence.
Conclusion
It is not easy to pay off credit card bills when money is tight, however, it is not impossible by all means to do so, for instance, one can cut back on some expenses, look for better-paying jobs, promotions, or other opportunities to channel more money towards credit card balances. It also means that, automating higher payments results in faster progress. Honesty in debt struggles will be recognized by creditors and they shall offer a helping hand to those strapped for cash. Lastly, discipline in the form of sacrifice, patience, and accountability may be needed for one to clear the debts. Organization and optimism in the face of credit cards result in freedom from them.
Call now for expert credit repair services: (888) 803-7889
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