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 How to Get out of Credit Card Debt

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PostSubject: How to Get out of Credit Card Debt   Mon Apr 04, 2011 10:38 am

How to Get out of Credit Card Debt
***********
Settle Credit Card Debts - Step I
To begin with, you need to change your mind set. There is no point getting out of debt just to get back in again, so you are going to have to change the way you do things for good!


1) It's really important to stop using debt for things you consume - ie. food, clothes, bills, luxuries, if you can't afford them change your choice of product so that you get the service you need but much cheaper than before.
2) Only use debt only for investing in things that actually produce cash-flow. In other words, assets that generate income, like property, online business, or even a traditional business. Get away from relying on cash-flow from debt and using cash-flow from what you earn from your businesses, this will keep you from sliding back into debt.
What you may find is that your debt is so large that your cashflow is less than what you need for your monthly expenses, and that while you're seriously trying to settle credit cards debts you feel you are getting nowhere. You're working too hard and your wheels are spinning!
The way you got into debt was that you spent more than you earned, so to get out of debt you're going to have to tun that situation around! That can be done by earning more or spending less, and really the best option is to do a combination of both.
Settle Credit Card Debt - Step II

If you feel that you can't trust yourself, write down all your credit card details; number issue & expiry date, etc, but it's probably better to just cut hem through so you can still read the information on the cards.

I Need to Get Out of Credit Card Debt - Step III
Set up an excel sheet and list all your credit card debts, along with the name of the provider, the interest rates and how much you currently need to pay them each month. Don't have these details? Just ring the card company to get them; this information is vital.
List out all your debts line by line, and if you like set them out from highest rate to lowest rate, and list your credit limit and the outstanding balance alongside.
Next calculate how much you spend on rent, food, utilities, and your other outgoings. You have to know this in order to budget. The reason you're doing this is to gain an understanding of exactly where you stand. If you've done this and your calculations show that you have money over each month, then you're in a good place.
However, if it shows that you are short of the cash-flow needed each month, you are actually going backwards at the moment and need to work on reducing your monthly spend and your earnings. See my useful article on How to Make Money With No Money to help with this!
Need To Get Out of Credit Card Debt - Step IV

You're almost halfway there now! Next sum up all your monthly debt repayment amounts and all your monthly budget amounts. Take your income and minus that amount. If you have nothing left after this or the figure is negative, you're have a negative monthly cash-flow and you'll need to do 2 things:
a) You need to access more income & b) you need to reduce the amount you spend. You can definately do this without reducing your quality of life, but you're going to have to be a lot more demanding as a consumer to get the very best deals for all your services.
I Need To Get Out Of Credit Card Debt - Step V
Here's how to negotiate credit card debts in a professional way. Credit Card companies are full of people just like you, with real lives and real problems and they can be very approachable and even help you settle credit card debts, if you speak to them in the right way.
Call up all your credit card companies, and explain that you have been a loyal customer for a number of years and would respectfully like to see "how much of an interest rate reduction you can offer me". Use those words; don't say "can you" don't allow them to say no, so phrase it in a way they can easily say yes to!
Need to Get out Of Credit Card Debt - Step VI
If you've gotten this far you're making some decent progress to get out of credit card debt. It's now important to undertake a credit check on your centrally held records. It's indespensible to help get out of credit card debt and allows you to see what information about you is being held.
Don't pay for it, but take one of those free credit check offers or free credit reports that are being offered online. However, make a note to cancel it before the free period ends. Remember you can always sign up to another free credit report offer in future, when you want to get an update.
If you're missing payments and struggling to provide what you need for your monthly payments, then you need to set the direct debit payments to the minimum amount. If you have something over each month, then you're already in a better position to get out of debt.

I Need To Get Out Of Debt - Step VII
To reduce your debt rates and consolidate credit card debts, apply for 0 percent credit cards that allow you to do balance transfers. Check which one's have the longest period and smallest balance transfer fee. See my article on magic tricks with credit cards for more information on this process.
Best balance transfer credit cards are advertised on various price comparison sites, so use those to your advantage!
Transfer as much debt as possible to the credit card that has the lowest interest rate, or get a personal loan from a bank at a lower rate to consolidate credit card debt.
Set all the credit card repayments to the minimum amount. As you've effetively consolidated you debt and probably reduced the interest you pay, he may have a little more cash-flow. Start to overpay the cards if you can. Now, there are 2 ways you can do this. You can choose to target the highest rate card first, or the one with the smallest outstanding balance.
It's completely up to you, which option you choose! Set up a separate automatic payment from your bank account, to make this overpayment easy. Even if it's just and extra $5 a month, it is still helping to drive you to the point where you get out of credit card debt.
I Need To Pay Off My Credit Card Debts - Step VIII
As soon as you've settled a card, use that freed-up cashflow to pay more the debt you have left.
Do you understand the process now? Note the progress being made, like a snowball gathering momentum; the strategy is becoming more powerful and beginning to get you out of credit card debt. So add the monthly cashflow which you had used to repay the first card, on the next credit card, to speed up your process to settle credit card debts.
I Need To Pay Off My Credit Card Debts - Step VIIII
So as soon as you settle the next credit card, combine the added cash-flow to the next payments on the next card to reduce the det. Keep going until all your credit cards and other debts are paid off.
Do free credit reports regularly and you'll see that as your credit record improves, you will be able to borrow more at 0 percent or preferential rates, and you'll be able to consolidate again, so you will find you have even more freed up cash The Debt Repayment Juggernaut is gathering steam!
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