Millions of Americans are in debt and looking for ways to get out. If you're one of them, I feel your pain. There are few things more frustrating than watching a chunk of your check go to a variety of creditors every month. While you try to slowly pay them off, you may also notice the balance stays the same, thanks to finance charges, over-limit fees, or late payment fees. These solutions should help.
- Stop spending! Some people get into these problems for things such as medical expenses, sudden unemployment, or other emergencies. But sometimes it's because "we want what we want when we want it" so we charge it even when we know, come the end of the month, we still won't have the money to pay for it. That purchase we spend on may not be very important the next day or even ten minutes later, but we buy it anyway, and worry about affording it later. Spending can be addictive, but even small purchases can add up.
In fact, you may not even know how much you spend. Experts suggest tracking your money and where you spend it, much like dieters are told to track what they eat and when they eat it. You can try quitting cold turkey and stop taking the cards out of the house with you or using them to shop online. Getting a little edgy? Too bad there's no patch for quitting the shopping habit! Be strong! And again, no excuses.
- Pay on time. You want to make sure you don't accrue any fees for late payments. If you pay your minimum balance even one day late, you will be charged. Sometimes, this can cause your monthly fee to double. Worse yet, it can affect the interest rate, beefing up what you end up paying over the life of your standing balance.
There's another way late fees can get you as well. If your balance is close to its limit, the late fee might put you over. That means, when your next statement comes around, you have an extra fee to pay for being late, potentially a higher interest rate, and a new finance charge for being over your spending limit. That's called the triple whammy, and it can end up being quite the vicious cycle.
Sometimes, you just can't make that payment. If for some reason, you can't pay your monthly bill, contact the company as far ahead of time as possible and see what you can work out. Also, sign up to pay bills online. That way, you don't have to worry about your check getting through the U.S. mail. Instead the site will tell you when your payment will post to your account.
- Pay more than the minimum. If you pay more than the minimum, you may reduce your monthly balance and the finance charge added on at the end of the month. Or, believe it or not, you may actually pay off some of the principal that month.
- Set up a Hit List. Stop being a prisoner to minimum balances spread across multiple cards. Become an assassin and set up a hit list, starting with the highest interest rate, or perhaps that small nuisance payment you have to make every month on a two hundred dollar balance. Yes, it's tough for many of us to pay anything more than the minimum, but pinch pennies and focus in on getting rid of one at a time. You free up more monthly cash with every one you eliminate; this will allow you to start paying more than just the minimum which is important. Plus, don't underestimate the emotional boost of seeing that zero dollar statement.
- Ask for lower rates or switch to lower rate cards. Another way is to eliminate the super-high interest rates that have you paying for purchases in effect several times over. There are two ways to do this. First, you can call the company and ask for a lower interest rate or for some other kind of break, waiving of a finance charge, for example. The second way to rid yourself of hideous rates is to find a new card offering low interest rates for balance transfers. Just be careful to read the new fine print; they can hike a rate pretty fast for late payments and they can also charge a nice sum for balance transfers.
- Embrace cash. Refuse to allow yourself to fall into that situation again. However meager the amount may be, set aside cash in a savings account so the next time you come across an emergency situation you won't have to rely on other people's money, and the accompanying interest rate to pay for it.
Debt can be an emotional drain, cause ongoing financial problems when you look to make a purchase like a car or house, and can keep you from spending money the way you'd truly want to spend it. Follow these steps to release yourself from debt, and start spending the way you want to.