How to Get Out of Credit Card Debt
Deciding enough is enough when debt it out-of-control
When it comes to your health and well being, too much credit card debt can have a serious impact. Credit card debt can lead to sleepless nights, daily stress, and family arguments at home. In many cases people struggle to make ends meet and believe that working hard enough will allow them to beat credit card debt on their own, but how do you know when its time to finally seek help?
No matter how you got into debt, there are options that can help you find relief! Call to speak with a trained credit counsellor who will assess your situation and provide you with advice. Alternatively, you can take your first step by completing a Free Debt Analysis online and a counsellor will contact you soon.
How much debt is too much debt?
While there is no set amount to measure if your credit debt is too high. It really depends on your personal situation and income, what’s manageable for one person may be a problem for another. Even though there is no set dollar amount, a good measure of your debt is your debt-to-income ratio. This compares how much debt you owe versus the total amount of income you take home. If you’re spending the majority of your income each month to pay your debts, you are likely not leaving enough for transportation, food, utilities and other bills you need to pay off to live comfortably. If this is the case, then you need to look at how you are managing your debt and it may be time to seek help.
What are the risks involved in postponing debt relief?
When you are struggling with your finances, it may feel easier to ignore the problem altogether, and hope that your situation improves. Keep in mind that credit card debt isn’t one of those problems you can push off until later, because waiting often makes the problem worse and more difficult to control.
Credit cards often carry high interest rates, so your debts will increase as interest adds up. If your account balances are high, even if you pay the minimum amount due each month, those payments may only be covering the interest accrued. You actually pay very little towards the original debt – also referred to as the principal — so interest continues to build up, making it even more difficult to get anywhere.
Can you handle debt on your own or should you seek help?
There are a number of strategies available if you need to reduce your debt to make it more manageable. If altering your better budget and negotiating interest rates aren’t helping your situation, you may need to take further measures such as debt consolidation. While there are do-it-yourself debt consolidation options you can take, it is important that you do your research, have all your facts straight, and choose the best debt relief option for you. Choosing the wrong debt relief route can often lead to an even worse financial situation.
Here are three steps to take when you’re ready to get out of debt.
Step 1: Get Organized
Any debt relief solution will require you to have your financial information readily available. You will need:
- Your monthly budget, including income, monthly bill obligations and estimated expenses.
- All credit card account information, including account numbers, creditor names, current balance and APR.
- The status of each account – i.e. You need to know if you are current with your payments, how often you make payments, or if you are late with payments, and when you last paid.
- Your credit rating – If possible, obtain a copy of your credit report, which lists the status of each account on the report. You can get a copy of your credit report through TransUnion or Equifax.
- Other unsecured debts, such as personal loans, student loans, lines of credit, amounts owed to Canada Revenue Agency, etc.. Make sure you know the amounts and when the debts were incurred as you will need to include these in your strategy to get out of debt.
Step 2: Get Informed
Once you have all your documents organized, the next step is to decide how to get out of debt given your unique financial situation. Between debt consolidation, debt settlement, do-it-yourself consolidation loans and more, there are several different options to choose from. It’s essential to know what options are available, understand how each option works and any impact they may have. Otherwise, you run the risk of making your debt problems worse by choosing the wrong solution for your needs.
Here are some questions to ask yourself when considering options to get out of debt:
- Does this option help me reduce my debt and make my finances more manageable?
- Does this option reduce the interest rate on my debt?
- How soon will I get out of debt using this option? Is it faster than simply paying my debts down normally?
- How will this option affect my credit?
In addition to researching your various options to get out of debt, you should also research any companies you are considering using to help you solve your debt problems. Some companies make a business out of scamming people who are in desperate financial situations. The last thing you want when facing financial hardship is to choose an option that can make your situation worse or more stressful. It’s always best to research any financial service provider by reading customer reviews online and checking the Better Business Bureau to make sure your company is reputable.
Step 3: Get Professional Help
This is an important decision for your financial future and you want to make sure it is the right one for your own situation. If you are considering a do-it-yourself debt relief option or debt settlement option, you want to know you are making the right decision before you invest your time and money.
If you have questions about your debt, or if you are unsure which debt relief solution is right for you, call to speak with a trained credit counsellor who can assess your financial situation and provide you with valuable advice with a free, no-obligation debt analysis consultation. You can also get started with a Free Debt Analysis.