How to Manage Credit Card Debt Relief
- 1). Identify your major life goals. They may include marriage, childbirth, sending children off to college and, ultimately, retirement. Recognize that your life goals may never materialize if you cannot get your credit card debt under control.
- 2). Order a free copy of your credit report once per year from AnnualCreditReport.com. At any time, you can purchase an additional credit report from TransUnion, Experian or Equifax. The report will help you to organize your outstanding debt balances according to lender and type.
- 3). Contact each lender and attempt to negotiate lower interest rates on debt. Credit card companies and banks will be open to offering reduced interest rates if you demonstrate a good history of making timely payments. If your current creditors refuse, look to refinance existing credit card debt. When refinancing, transfer balances onto a credit card that features a relatively low interest rate.
- 4). Seek out a loan modification if you are having trouble making credit card payments. In a loan modification, the lender agrees to a permanent reduction in your principal balance owed and interest rate, which should make for more affordable payments. If applicable, consider a loan modification on your mortgage to free up additional cash. Be advised that banks are under no obligation to approve a loan modification.
- 5). List out your individual credit card balances according to interest rates. To save money, prioritize debt payments by interest rates. Work to first pay off your credit card with the highest rate.
- 6). Review your personal finances for sources of cash that can be spent to pay off credit card debt. If you have cash reserves equal to more than six months of living expenses, withdraw the money from the bank and send it to your credit card companies. You may also sell off stocks and bonds to raise cash for additional credit card payments.
- 7). Calculate your free monthly cash flow available to make regular debt payments. Review recent bank statements and pay stubs to subtract expenses from income. To improve your free cash flow, cut discretionary spending on consumer goods. Consumer goods, such as high-end electronics and luxury spa treatments, are not necessary for survival and do not add to your net worth.
- 8). Make debt payments. Make the minimum payments on your low-interest rate debt so you can preserve cash to aggressively pay off your most expensive credit card.
Source...