Busting Your Credit Card Ghosts from the Past

By ccflyers on June 3, 2008

A financially stable, two-parent family can afford raising children. But what if you are a single mother with low income? You can still make it through. But if being a stay-at-home mother is your full-time job? At least for some period, during the first year, when your baby needs you around 24/7?

Ok. Child social support payments and unemployment benefits can help you. But this money will barely be enough to cover all your bills and credit card payments. So, what do you do with your credit card balances? You just set your priorities and try to provide your baby with all the necessary. And credit cards can wait.

So, your baby already walks and makes attempts to say his or her first words. Things got much easier now. You can go to work again and make some money for living. And there they are. Your old plastic ex-friends, the ghosts from the past that you abandoned a couple years ago. You decide it is high time to do away with your old debts. But you just don’t know where to start. You have no idea what has been going on with your cards during those two years.

Here are three steps that can help you to eliminate your old credit card debts.

Step #1.
First of all, find out your status quo. Make a list of all your balances with interest rates and minimum payments, and credit card bills, of course. Count your total debt and estimate your financial abilities. Make up a scheme of paying down your debts.

Step #2.
If you your income is pretty low, do not expect it will be a piece of cake to eliminate your old debt and handle your current credit cards. If you are determined to pay off your debt, you will have to reduce your spending to the minimum. Try to use every opportunity to make some extra money. Think about selling something you can do without and about how you can save on gas, utility charges, etc.

Step #3.
You can resort to credit counseling services. Such organizations promise to reduce your credit card debt for a fixed price. However, you can manage your debt on your own better. No one but you knows your financial standing and possibilities. But you can find a nonprofit organization with a good reputation.

Now let’s move on to your debt.

Most probably, a large portion of what you owe to creditors is more the result of the snowballing effect of credit card late fees, default rates and overdraft fees, than the actual amount of your purchase charges. There is a chance that lenders will agree to waive some of the fees.

After you negotiate the best conditions for eliminating your debt, start paying off the card with the highest interest. This can be some of your reward credit cards. As for other plastics, keep making just minimum credit card payments on them. Pay off card after card sticking to the principle of cards with the highest APR are first. If you have two cards with equal interests, pay down the plastic with the smallest balance. This way you will reduce the total amount of money you are to pay that month.

If you think that you can mess up all those indebted credit cards of yours, you can consider getting a balance transfer card and consolidate all your debts on it. Interest-free period will be of great help in your debt-relief process.

You can also think about taking a personal loan to get rid of your debts. Perhaps one of your friends or family members will help you. You can agree on paying some nominal interest to him or her. This will make paying down your credit card debts easier and faster.

What else to add?.. Well, I will quote the words of Richard Gere’s character from “Runaway Bride”: “I guarantee there’ll be tough times. I guarantee that at some point you are gonna want to get out of this. But I also guarantee…” that when you are though with paying down all your debts, you will feel a great relief.

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3 Responses to “Busting Your Credit Card Ghosts from the Past”

  1. Emma P. said:

    I think that the you need to start with getting a credit report – it will show you financial situation. If you can’t work full time, you can find some freelance job to pay off your debts – you can work from home.

  2. DanJohnson said:

    Start with ordering a credit report. It is less stressful to know the facts than to guess about how bad your financial situation might be.

  3. evvy said:

    Who you gonna call? Ghost busters!
    I think such people should ask for advice of a professional credit counseling service.

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