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Tips to overcome debt anxiety

Tips to Overcome Debt Anxiety

Do you feel like you're drowning in debt? Do you dread the sound of another bill coming through your mail slot? The chances are that some of those bills are for credit cards. If you can take control of your credit card debt problem and get some debt advice, you will quickly find yourself much better off.

Why? Not only will debt advice save you a lot of money in interest charges, but, if you ever miss a payment on your card(s), it can go on your credit report as a black mark where it can be seen by lenders for a good few years. This could have a negative effect on your chances of taking out other financial products in the future such as car loans and mortgages.

So, to help make things clearer here, we’ll give you five things that you can do to reduce your credit card debt problem:

  • Pay more than the minimum payment and pay on time: To have even a hope of paying off a credit card debt, you must make (at the very least) the minimum payment listed on your statement every month. Just as importantly, pay it on time to avoid a late payment charge (which will make next month's minimum payment even higher) and get you into all sorts of debt problems.

  • Work out a budget: Work out what payments you need to make and when they fall due in the month, and then work out how much you can repay per month as a whole. Get some debt advice if you find this hard to do. Next, work out what needs to go where. Here's an example (not necessarily appropriate for all situations, but it’ll give you a general idea):

    Say you owe a total of $1,000: $200 on a store card, $400 on one credit card and $400 on another credit card. That means 40% of your debt is on one credit card, 40% on the other card, and 20% on the store card. If you have $200 a month spare for debt repayments then pay 20% (i.e. $40) off the store card bill and 40% off (i.e. $80) off each of the credit card bills.

  • Start your own system of credit card debt reduction: Evaluate your situation and create a structured system for paying your bills. Set deadlines and rules and stick to them! Need help getting organized? There are some great software programs that are easy to use and that can help you sort out your credit card debt problem, such as Microsoft Money and Quicken.

  • Wheel and deal, within reason: If you can negotiate some kind of deal with credit card companies, then you can really help yourself meet that goal of eliminating your credit card debts. Why will they listen? It’s simple: so many people out there have card debts just like you do and many companies have realized that they need to be flexible. Better to have someone listen to debt advice and to pay a lower interest rate or pay to a pre-agreed deal than have a customer walk away and default completely. As an alternative, think about rolling your credit card debts into a personal loan; you’ll have fixed payments, interest won’t keep being added, and you’ll pay back less in the long run.

  • Keep your creditors informed: If you have so many debts that you cannot possibly pay them off all at once, take the initiative of writing letters to creditors to explain your credit card debt problem. Include a budget that shows them how much spare cash you have for debt repayment each month and how much you would pay them back. They don’t have to agree to this, but many will and some will even agree to freeze interest for you which will make your debt problem easier to manage. The key thing here is to talk to the companies to whom you owe money. They’ll be more sympathetic to your situation if you are honest, open, and show that you are willing to try and pay them back over time.

With this debt advice in mind, hopefully you'll be able to ease your debt anxiety and tackle any debt that starts to grow before you have a flat-out debt problem.

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