Planning For Your Future

Credit card debt can be extremely frustrating. While you are attempting to get your finances in order, the high monthly payments prevent you from being able to break even, which leads to a cycle of borrowing. Thankfully, it is possible to consolidate credit card debt.

First, Get Serious

In order to get out of debt, you have to change the behaviors that got you into debt in the first place. You should take a careful look at your budget and track all income and expenses over a period of time, generally a month, before starting the process. Then, see if there is anything that you might be able to cut or if there might be any way to bring in a little bit of extra income.

For example, are you eating fast food several times a month? Consider buying some extra groceries for the house and cutting the fast food out for a few months until you can get your finances in order. You can also just cut back on the number of times you eat out every month.

Consider Nonprofit Debt Counseling

When you first acknowledge your debt, it can be a bit intimidating. For many, making the minimum payments is a challenge. Look in your area to see if there is a nonprofit financial planner available. While many counselors may charge a small fee, some services are free. A financial counselor can function as a third party who negotiates lower monthly payments with your creditors.

At this time, it may be wise to consider credit counseling and education in order to prevent problems in the future.

Watch Yourself

Be mindful of the way you spend money. Make sure that you make the monthly payments, especially during the period when the interest rate is lowest. Do not accrue more debt on top of consolidated debt, or else you could get into more debt than you began with.

Make Sure There Are No Fee Increases

If you take out a consolidation loan or transfer all of your debt into one credit card account, keep in mind that the lower rate that you are paying is likely temporary.

Balance Transfer and You

It's possible that taking advantage of a balance transfer to consolidate your credit will improve your credit score. However, in order to maintain or improve your credit, you must use the line of credit given to you. Traditionally, it has been recommended that you only use 30 percent of what you are allowed in order to properly manage your credit going forward, and some say that staying between 10 percent and 20 percent of your credit limit is the best plan.

Ask for a Lower Monthly Payment  

An alternative to consolidating your debts into one account would be to ask your creditors for a lower monthly payment. This can be a logical solution when there are only a few accounts with minimal debt.

Escaping credit card debt is possible with a little dedication. The above steps should help get you started.