Paycheck Chronicles

From The Mailbag: Escaping From Your Credit Card Debt

Credit cards, like so many tools, can be very useful, and very dangerous.  Some people can use credit cards responsibility, and some people can't.  There's no judgement in that, it's just a fact.  What do you do when you're in over your head?

Dear Kate,

I can't seem to get control of my credit card debt.  I let a balance build up, and then I started getting dinged by late fees and over-limit charges.  Now my monthly payments are too big.  It's out of control, and I don't know what to do.

Eddie

This is a common scenario, and one of the reasons why some financial personalities say that no one should ever use a credit card.  It's easy to get in over your head, but you can conquer this debt.  It might take time, and it will probably require some sacrifices, but you can do it.

Dear Eddie,

You've taken the first most important step:  you've realized that your credit card account is a problem.  I'll give you some ideas, but I encourage you to meet with someone who can help you individually.  Your base family service center has personal financial counselors who are trained to help in these situations, or you might have a trusted friend who is good at this stuff.

First, you need to stop charging on your card.  If you can't get through the month without using your credit card, sit down and figure out why.  If necessary, cut up your card.  Do whatever you need to do to stop charging.

Second, you need to stop getting over-limit charges.  Find out how much you are over your limit.  Call your credit card company and tell them that you are serious about paying off this bill, but the late fees and over-limit fees are preventing you from making progress.  Ask them to waive some or all of the fees.  It can't hurt.  The worst thing that can happen is they can say no.  While you have them on the phone, ask them to lower your interest rate.

Then, find every financial resource available to get your balance under your credit limit.  Go on an emergency spending freeze.  Eat out of your pantry.  Walk or get rides instead of driving your car.  Roll the coins in the jar on your dresser.  Don't buy anything or spend any money and throw every single penny at this debt until you get the balance down.

Third, find out when your next minimum payment is due and figure out how you are going to pay it.  Put it on your calendar, put an alarm in your phone, or put a post-it note on your bathroom mirror.  Heck, do all three.  Make it your highest priority to pay the minimum amount before the due date.

Once you eliminate the over-limit fees and the late payment fees, you'll start to have a handle on things.  But don't stop there.  Challenge yourself to pay this debt off for good.  What will you have to do?  Continue to work on a tight budget, and then look for ways to increase your income.  Can you get a second job?  Dog sit for your buddy?  Sell plasma?

It's awesome that you want to deal with your debt, and I know you can do it.  Find a friend or trusted professional to help you through the steps.  Good luck!

Kate

If you're in over your head with credit card debt, please know that you can fix this.  It takes resolve, patience, and focus, but you can get your debt under control.

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