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 If you've got heaps of credit card debt, there is no need to feel like you're all alone. In fact many people go through a phase in their life when they experience a "financial" crisis. In this publication we're going to talk about how to go about eliminating credit card debt including a discussion of how much debt the average person carries and a process for reducing or eliminating that debt.
Credit Card Debt
You're likely to see a lot of different numbers thrown around, but the latest consumer debt statistics tell us that the average American household carries something like $8,500 in revolving lines of credit which for most consumers is just another name for credit card debt.
We realize that this number is an average and averages can be misleading, but unless all you readers are on your tenth cup of coffee, Mean, Median and Mode discussions are best left for another day. One thing that we think we can agree on is that credit card debt elimination is something people are interested in addressing.
Credit Card Debt Elimination Scams
When researching this article we came across a lot of information on the growth of debt elimination scams. If someone has a lot of debt, the last thing they need is to fall prey to someone that is going to hustle them out of $2,500. We can only think that victims of this scam have their good judgment clouded by their financial situation.
But take it from us - there is no such thing as a buying a certificate that forgives all your debt. If you've read this warning and you're still interested in how this "certificate" works let the FBI know, they are interested too.
Real Options to Eliminate Debt
So then, what are the real options you have to deal with your goal of eliminating credit card debt? Here are a few ideas that might help you get on the right track:
Develop a Household Budget
We've heard all the excuses: "I'm not a budget person." "I'm not good with numbers." Well, if you've got a lot of credit card debt, then we can actually believe those excuses. The problem is, you're violating a simple financial rule that we all should obey - "Money In" must be equal to or greater than "Money Out."
Creating a Budget that Works
Start your budget by listing income from all sources. Then list out your expenses and start with the important ones, let's call them mandatory expenses - things like rent, mortgage payments, travel to work, utilities, car payments, and insurance premiums. Next make a list of your discretionary expenses - the ones that you could cut back on or eliminate if you had to. Discretionary expenses might include items such as entertainment, clothing or recreational activities.
Most credit card companies offer online services through their websites that allow you to see all of your charges each month. Those reports will probably give you good start on most of your discretionary expenses. Once you've got your list together, establish a priority - this is serious business and will likely involve some painful decisions. Then add it all up and make sure the budget works.
Budgeting Worksheets
We've provided online tools in three different articles on this particular topic - so there is no excuse for not being able to put together a budget to help you deal with your credit card debt.
- In our series on Budget Worksheets we walk you through the process of creating a budget based on a high level budget template you can download.
- Our article on family budget basics uses a slightly different approach and allows you to compare your budget to that of an average American family.
- Finally, our article on household budget basics provides you with some additional hints on how to create a viable budget that can help you get your credit card debt under control.
Consolidating Credit Card Debt
You might be able to achieve your credit card debt elimination goal faster through debt consolidation. One way you can do this is through a second mortgage or a home equity line of credit. Most lenders will require some kind of collateral and your home is going to be a natural choice, but think carefully about this one.
If you find yourself missing these payments, you could wind up losing your house and home. That being said, consolidating your debt into a loan can provide you with certain income tax advantages that are not available with some other types of debt consolidation services - make sure you ask questions about tax advantages.
Tools for Dealing with Credit Card Debt
We've also introduced several online calculators aimed at helping our readers figure out what they can do about their credit card debt including:
- Credit Card Payment Calculator - our credit card payment calculator helps you to figure out your minimum monthly payments based on your outstanding credit card balance and the APR on your credit card.
- Credit Card Payoff Calculator - our credit card payoff calculator allows you to determine exactly how much you need to pay each month to pay off your existing credit card debt.
Elimination of credit card debt through debt consolidation can be tricky. Formulate a plan for yourself that you can live with - get rid of that expensive car or getting a second job can help fill the financial void. Once you start down the right road, stick with your plan and soon you will find yourself debt free.
About the Author - Credit Card Debt Elimination
Bill Sharlow is the Editor of Money-Zine.com. Copyright © 2004 - 2007 Money-Zine.com
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