Tuesday, August 31, 2010

Guest Post: Tips to Erase Credit Card Debt

Shopping with the plastic money has become a fashion statement for the youngsters. As money is limited in our hand it does not give a scope of carefree shopping. But when we have the card in the wallet our expectation rises and there is no restriction while buying. In this way our expenses increase and we fall into the trap of debt. This article would share some useful tips in order to eliminate the credit card debt.

  1. Prepare a budget: Make a budget and try to follow it in this way you can control your expenses. Your first task would be to pay off your debts and then create a budget. In order to avoid similar situation you need to redesign your lifestyle. Control your expenses if you find that your expenditure is increasing than your income then you might face trouble. In order to save yourself from the trap of debt prepare a budget and secure you financial future.

  2. Creditor negotiation: Negotiate with the creditor on the outstanding balance as well as on the interest rate. The creditors would be willing to negotiate with you only if you have a valid reason why you have been a defaulter. If he still does not agree to negotiate on your terms then you can threaten him of filing bankruptcy. If the negotiation is mutually beneficial then the creditor would be willing to reduce the outstanding balance including the interest rate and you would get a profitable deal.

  3. Only minimum payment should be avoided: Try to make a monthly payment so that you do not incur debt. It would not be a smart move to make a payment of minimum amount per month. Only paying the minimum amount is going to prolong the period to pay off your debt. If you are inclined to pay off the outstanding balance then start saving money and get rid of debt.

  4. Borrow from a 401(k) plan: You can take loan against the 401(k) plan. But the interest rate that is charged on the loan is 2 points above the average. The credit card interest rate is high compared to this loan. So pay off the card loan and then pay off the borrowed amount from the plan.
    It would come under taxable bill along with a penalty charge if you fail to pay back the amount. Consider to settle your loan before you plan to change your job.

  5. Use cash instead of credit card: If you use credit card then you cannot avoid incurring more debt. If you have piling debts then make it a point to avoid using the credit card unless and until you pay off your existing debt. Use cash instead of your plastic money while you go for shopping. Credit card instigates you to spend more than you can afford. So be attentive while you think of using your credit card.

So these are few following ways that would help you to erase your debts and help you to get a financially sound future.

About the Author
This is a guest post by Kevin Craig who is a financial writer. He has helped lots of debt burdened people with free counseling and advices on many finance related topics. If you are interested in writing a guest post, please contact Seattle Simplicity at the Email address listed in the sidebar.

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