Fixing credit card debt problems - Part 1

This is the first of a three part series on how to fix your credit card debt problems.

1. ESCAPE COMPULSIVE CONSUMERISM

Refuse to spend any more money and try and catch up. Become a non consumer - try everything you can NOT to be suckered in to the consumer society. Make it a new sub religion.

Don't consume any more than you absolutely need to survive. Ignore all the ads on TV - endless aren't they? - that are there just to entice you to spend money and add to your credit card debt. 

Watch non commercial TV instead if you have to - yes, I know the programmes aren't always mainstream, but variety is the spice of life. And by refusing to be brainwashed any more by commercial TV, you will end up spending less.

You don't have to have the latest IPad to make your life complete. You can only wear one shirt at a time. You can only eat one meal at a time.

If you do have an unexpected gain, pay it off the credit card with the highest interest rate. You don't know the interest rates on all your credit cards and store credit cards? Why not? 

If you really don't know how much your credit cards are costing you, you are doomed to spend the rest of your life paying off money to keep credit card company bosses in the fine style to which they have become accustomed.

2. CUTTING UP THE CREDIT CARDS

Save the credit card that costs you the least in interest and cut the rest up. No, not speaking metaphorically - REALLY cut the other credit cards up. You don't need them. I know, your head says Ï should keep them just in case even if I don't spend on them". Wrong!

The smartest move you'll ever make in the battle against credit card debt is to minimise the number of cards you have. Remember, if you want to buy a house or refinance a house, your credit score is based on the TOTAL OF THE CREDIT CARD LIMITS you hold. Note: they don't care how little you owe on them, they only count up the maximum limits on the credit cards and you will find you are ineligible for housing loans if you have a large total of maximums on the credit cards you hold.

Another consideration is to maybe keep the oldest credit card you have as length of credit history is one of the components "they" use in assessing your credit worthiness in those reports they do on you when you are asking for credit or a bank loan. By closing only your newest credit cards first, you make your average credit card history older which is a good thing from the lender's point of view.

2a A GOOD TRICK TO USE

To make sure you don't keep impulsively splurging on the credit card you decide to keep, put it in a three quarter filled plastic cup of water and put it in your freezer. In that way it freezes solid and needs at least 12 hours at room temperature (probably 24) to thaw it out so you can use it. No, it won't "ruin it". However, be warned, trying to thaw it out in the microwave will wreck the card and make it useless.

In this way you will at least have a day to reconsider if you want to put that new "must have"on the credit card.

2b ANOTHER GOOD TRICK TO USE

Look at what the minimum payment is on each credit card you have. Divide it by four and set up an electronic payment schedule so it automatically gets paid from your bank account every week to the credit card provider. In this way you will pay less interest on your credit card as the amount charged is on a daily basis. Your credit card interest will reduce significantly if you do.

3. CONSOLIDATE THOSE CREDIT CARDS

Shop around for credit cards offering exceptionally low interest rates and transfer the amount owing on your high interest rate cards to them. DO NOT then refill the credit cards you pay off. CUT THEM UP and throw them away.

If you can, there are heaps of people out there offering to refinance and consolidate your credit cards in to one amount, generally with an attractive 6 to 12 month interest rate - this is probably your last chance to get on top of things in this introductory rate period so don't waste the opportunity.

Spend the next 6 to 12 months doing nothing else but paying off this refinanced credit card amount. 

4. THE TRUE EMERGENCY CREDIT CARD

Put the one card you kept away in a safe but difficult to get at place for emergencies. You may just need it in the future. But use it only for real emergencies. A new wardrobe is NOT an emergency. A failed hot water system is. A new IPad is NOT an emergency. A blown up car motor is.

Thanks to http://creditcarddebtproblems.com.au/ for this information