Managing your credit card debt

So, you've used your credit card, and you can't make the full payment. Maybe you've been like that for a while, barely able to manage the loan you have with your credit card company. That is not a good situation to be in, each paycheck you get, you have the looming threat of your debt.

To pay off your debt, you need to, every month:

• Figure out your budget. Write down all your income, and write down all your necessary expenses. Food is necessary, beer isn't. That new Blu-ray player isn't, paying the electricity bill is.
• Figure out how much you need to pay. List all your credit cards with their current balance, minimum payment and interest rate.
• Prioritize. The cards with the largest interest rate are top priority. Then in that category, the card with the highest debt is your first priority.
• Meet the minimum. On all your cards, find enough money to pay the minimum monthly payment for all your cards. If you can't pay that amount on all your cards, pay the ones that are prioritized (see previous point).
• Start paying it off. Once you've met the minimum, you can now start losing that debt. Start paying off the high priority card, dollar per dollar. You have to exceed the minimum amount on the top priority card, otherwise you won't be going anywhere. Once that top priority card is paid off, go to the next one. Always pay off the one that has the highest debt and interest rate.

The first couple of months will probably be the hardest, considering the minimum payment is a percentage of your loan for that credit card. Once you start paying it off, that amount will shrink as you pay it off, so you will have more money to use to actually pay off the card, instead of just paying the bare minimum, which will make your debts go away quickly.

If you're in a bind, you can try to call your credit company and see if they will reduce your rate. It will not always work; you're asking them to make less money off of you. But some will if you've been a good client (paying off your debt on time). Calling them won't cost you anything, and the worst thing that can happen is that they refuse. You can always try later in a few months, after you've started paying off your loan and keeping a good record with them.

I realize that this will take time, months and months, but a debt is a debt, banks won't just let you walk free after taking a loan. Plan ahead next time, and don't live above your means.

Take my money,
Phil