Being faced with a credit card bill that increases each month can be overwhelming. You may start to feel that you are caught in an endless cycle of making payments while you never see your outstanding balance decrease. Fortunately, there are ways to escape the labyrinth of debt.
1) Use the Debt Snowball Method. Create a list of all your credit cards, balances, and interest rates. Figure out how much extra money you can pay after making all your minimum monthly payments. Take that extra money and put it towards paying off your card with the lowest balance. After this card is paid off, make this extra money payment to the card with the next lowest balance card and continue this process until all the cards are paid!
2) Cash out your savings account. While it may seem difficult or undesirable to do this, sometimes it just makes sense if you have some extra cash. For example, if the interest rate on your debt is 12%, your investments would have to pay over 18% before taxes to equal the dollar outflow. With the current state of the economy, no savings or CD account is going to yield this kind of return on your investment. The higher the interest rate on your debt, the more sense it makes to repay your debt rather than just invest it in some type of savings account.
3) Use the services of a “Debt Doctor.” Even if you are wisely strategizing to pay off your debt, circumstances beyond your control may lead you to seek extra help. Contact a credit counseling service like the a Consumer Credit Counseling Service (http://www.bydesignsolutions.org/budget_and_credit_counseling.html). Their credit counselors will help you negotiate payment plans with your creditors, teach you money-saving strategies, create a budget, and reach financial freedom!