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If it feels as though your credit card debt might drown you, there are a few things you need to know. The most important thing to understand is that your world isn't ending. There are ways out of the situation you're in. You just need to take a few sound steps to see the light at the end of the tunnel. Wondering what those steps are? Here's how to do it... 1. Assess the Situation First and foremost, no matter how ugly it may be, you need to assess the situation. Just how bad is your credit card debt? Just how deep are you in? And, most importantly, is it manageable? To answer these questions, you need to add up all of your credit card bills -- and not just the minimum monthly payments. Make two columns. In column A you're going to put the total of all of your minimum monthly payments and in column B you're going to put the total of all your credit card debt rolled together. Now that you know how much your debt is, budget yourself so you can make your minimum monthly payments plus an additional five to ten percent of the total you owe. So if you owe $2,000 and your minimum monthly payment is $100, you want to pay a total of $200 or $300 each month towards that card. If you owe thousands and thousands, you might have to reduce that five to ten percent to two to three percent in addition to the minimum. If you can't afford to pay any more than the minimum monthly payment (or you can't even afford that) you're going to have to move on to step 2. 2. Credit Counseling or Bankruptcy So you're in way over your head and you can't afford the payments at all. What do you do? You get into a credit counseling payment plan that can reduce the amount of your minimum monthly payments and the interest you pay, or, if that won't work, you claim bankruptcy. Yes, bankruptcy is an ugly word, but it might be the only way out of your situation. Play your cards right and in ten years your bankruptcy is off your credit record and your on your way to a solid credit future. If you drown in debt and don't do anything about it, that's not going to happen. 3. Sticking to the Plan Whether you choose a monthly budget, credit counseling or bankruptcy as your way of navigating out of your credit card debt, make sure you stick to the plan and don't get yourself back in this situation in the future. We're all entitled to make mistakes, but we have to learn from those mistakes. Evaluate what got you here to begin with, and avoid those same pitfalls in the future. Credit card debt can be overwhelming and scary, but it doesn't have to be the end of your financial future.
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