Managing Your Credit Card Debt - Part 1

The desire to get out of debt and ask yourself what are you willing to change or give up to make the goal of being debt-free happen.

Credit card debt creates anxiety and financial chaos. It plays havoc with relationships, and if you have children, it sends them the wrong message about money management. I can try to make in simple, but not easy, for you with the following five-step program:

Step 1: The desire to get out of debt. This is the most important part of this program. Lip service is not acceptable here because this is going to be hard work on your part. It's going to require lifestyle changes and the breaking of bad habits. Are you ready?

Step 2: Assessing just how much debt you have. Calculating your net worth will give you a good picture of your present debt load. That will help you determine how much debt you have and who you owe. Now take the list and break it down further. What interest rates are you paying for each card? The most current information can be found on your card statement. You may be surprised to find that the rates have increased since you first opened your account.

Step 3: Devise a workable plan. You need a plan that you can live with. Put it in writing, You'll be more committed to it. Stop using your credit cards! Call your creditors and ask of they would be willing to lower their interest rate. Tell them you are planning to cancel that card because you can get a better deal somewhere else. Review your cash flow. Where is the money going to come from each month to reduce your credit card debt? What are you willing to change or give up to make the goal of being debt-free happen? Start out with baby steps, paying more that the minimum each month.

For a psychological boost, look to pay off the card with the highest interest rate first or choose the one with the lowest balance so you can eliminate that one quickly. Some individuals have found that switching balances to a lower-interest-rate card also helps. But beware! More and more card companies realize that you are rate hunting and make it difficult to get a low rate for the balance transfer. Read the fine print of any new contract you sign, even if it means getting a magnifying glass to help. Software programs, such as Intuit's Quicken and Microsoft's Money, can help you prioritize and schedule payments by using the "highest rate first" method.