Tips on Reducing Your Credit Card Debt.

You don't need me to tell you that these are tough economic times. Unless you are one of the few who have millions of dollars lying around (please feel free to send some this way), chances are that most everyone will be affected by it. Although it will be difficult to see our way through to the end, it will be even more difficult for those who are already deep in debt. If you do fall into this category, let me just say that you are not alone and, through some old fashioned hard work, we can get ourselves back on track.

The first thing that we need to do is make a budget. I know that this is not the most fun thing to do, but it does need to be done. Gather together all your bills and calculate your monthly payments. I understand that some of your bills may come quarterly or annually, so you will need to break those payments into monthly amounts. I would also suggest that you keep a spending diary; that way you can keep track of your daily expenses. Creating a budget is the first step in credit repair. Doing this, will give you a visual picture of your financial situation and allow you to decide on how next to proceed. Once you have a clear picture of where you stand, you will be able to begin the process of prioritizing your bills.

Now, on to the next important step: prioritizing…For me, housing is the number one priority, so my first payment of the month goes to the mortgage. Next, if you have an auto loan, that would be number two on this hit parade. We next need to assign priorities to your credit card payments. Although you may be tempted to try to tackle the largest bill first, try to avoid that temptation, because in order to fix credit problems, you will need to take a systematic approach. First, write down the minimum payment, interest rate, and total amount owed from each card; this you will keep for your personal records. Next, find the card with the highest interest rate and the one with the least minimum monthly payment. If there is less than a thousand dollars difference between the total amounts owed on the two cards, then you should start concentrating on the card with the highest interest rate. If however, there is more than a thousand dollars difference, put your focus on the card with the smallest minimum monthly payment.

Next, you will want to order your cards in terms of minimum monthly payment: from least to greatest. Here is how it will work: as soon as the first card you are working on is paid-off, you will take the payment you were making on that card and apply it to the next card on the list. For example, let’s say that the first card had a minimum payment of $100 and the second card in line has a payment of $150. Once that first card is paid-off, you will add that $100 to the $150 of your next card and apply the total $250 to that card. Once that card is paid-off, you will apply that $250 to the next one, and so on. I know from experience that this is a very slow process at the start. However, after the first one or two cards are paid-off, the process will go much faster. Please try to keep in mind that you are making a difference, however small it may seem at the time.


If you find yourself in a situation where you are already starting to be late in making your payments, please contact the credit card agency and talk with them. Tell them your situation and explain what you are trying to do. Let them know that you have made a budget and are currently working to pay your debts. Most agencies will be willing to help you; after all, they want the money you owe them. Working to repair credit problems is a long and arduous process, but there is outside help available if you need it. There are Consumer Credit Counseling services available and they are free of charge. They will work with you in adopting a budget and some will even negotiate with the credit card companies for you. Check your local area for the service near you. There is no reason to pay someone to help you get out of debt, when there are private agencies that are willing do it for you. Yes, you may have to attend budgeting classes, but is that such a large price to pay? Besides, you will be learning a valuable skill that you can use for the rest of your life.

As always, if you need help or just want to talk, please feel free to contact me. I will do my best to assist you. We are in this together and together we can win.