Mom’s Money

Make The New Year A Debt Free Year

If you’ve got credit card debt that’s out of control, you are not alone.  If your budget is getting tighter and tighter every year, you are really not alone.  This year has been excruciatingly painful for many families in this country and around the world.  How can you make the New Year a better year financially speaking?  First step is to get rid of that credit card debt for once and for all.

Easier said than done.  Well, yes and no.  The process is easy, but it doesn’t happen overnight or sometimes not even in a year’s time.  But, every month that you stick to a debt free plan is another month closer to finally breathing easier.

The method you employ to become debt free differs from family to family, even though the basics are the same.  We’ll give you a few basics here to get going, but depending on the amount of debt and whether you are still making your monthly payments on time, your strategy will be uniquely yours.

Begin by figuring out your disposable income.  That is your monthly income minus your monthly household bills and estimated variable expenses, like groceries.  The money left is your disposable cash which is what you have left to pay off your credit cards.  Look through your cards and decide which ones you want to pay off first, or how much money you want each card to get each month.

Once you know how much money you have available to pay down your credit cards, you’ll be ready to call the credit card companies.  You need to arrange lower interest rates and have any late fees and overage charges reversed.  Be honest with the customer service person at the credit card company and explain to them that you are paying off several credit cards and want to arrange payments within your new budget.  Tell them how much you can afford to pay them; don’t wait for them to tell you what they want from you each month.

A third party like a debt relief company should be your last resort.  You will have a better return on your payments if you arrange a payment schedule directly with the creditor.  However, if you do need to go this route, ask friends for recommendations and call the Better Business Bureau to check every credit counselor or debt relief specialist before you meet with them. 

Debt consolidation is another option, but beware.  Check every option thoroughly before proceeding. Again, your first and most cost effective method is to deal directly with the creditors.

Now the hardest part. Sticking with your plan. Be watchful and make sure your budget plan is being followed precisely by everyone.  This will require absolutely no credit card purchases and no missed payments.  You should start to feel a little relief after a few months, but don’t be lulled into a false sense of security and start spending money.  Patience, time, and fortitude are your friends.  Have a Happy, Prosperous, and Debt Free New Year!