I need to get out of credit card debt. Any pointers?

[optoman]

I just realized that I am way over my head in debt. The good news is that I just started a job that pays 70K. I think I can get out of debt in a year, but the urge to spend just sucks. Should I cut up the cards? I really want to keep one or two to have in case of an emergency and how much money should I keep in the bank? Any gotten out of debt and have any suggestions? I would really appreciate it.

 

[vi edit]

1) cut up the cards
2) pay off as much as you possibly can as soon as you can


As far as how much money to keep on hand, safe rule of thumb is to keep enought saved back to keep your NECESSARY bills paid for two months. No, a 1.2 gigahertz Athlon is not a necessary item. Your rent, utilities, and car payments are.

 

[compuwiz1]

Yep, the first step in getting out of debt is to stop getting into it. That means cutting yourself off from things that can cause impulse spending, like credit cards. I will caution you, once you cut them up and start paying them down, the offers for even more credit will begin rolling in, so you must avoid temptation. It's always far easier to spend than to pay back.

 

[bcterps]

It would also be wise to get a debit card which you would use for most of your transactions. That way you can only spend what you have. Good luck! Its tough, but its worth it! And stay away from the FS/FT forum and the Hot Deals forum, its too tempting.

--Ben

 

[optoman]

Thanks for the help guys. I might actually be visiting the For Sale/Trade forum to dump some extra parts off. I will cut up most of my credit cards, but I will keep on for now (in case of emergency since I won't have a penny for another week). I get my first pay check soon so I can actually start paying those stupid spending sprees I did in college off. My goal is to be out of credit card debt by the end of this year. I just did a huge balance transfer for 2.9% for nine months. This will help alot since the APR is now 14.9% from the card I am tranfersing it from. Thanks again and if anyone else has any more advice I would really appreciate it.

 

[RossMAN]

First I would suggest contacting the National Foundation for Credit Counseling for a free consultation and plan on how to drastically reduce your debt.

If you'd like to play out some "what if I pay $xx.xx more per month to my VISA, how quickly can I pay it off" scenarios then do a search for Credit Card Calculators on the web. Here's a list of over 100 Financial Calculators. Check out the credit cards, personal loans, budgeting and savings calculators.

and I totally agree with benchiu's advice, stay away from the FS/FT forum and the Hot Deals forum, its too tempting..

If you're a home owner or own a car then consider using either of those as collateral for a secured loan which will probably have a lower rate than an unsecured personal loan. Chances are a big installment loan with a fixed rate and fixed payments will be the best route to go. It will be one lump sum payment per month, no annual fees, fixed rate, fixed payment and you can really see how quickly your debt is being paid off.

Keep two credit cards around for just emergencies but resist the temptation to use them. Good luck!

 

[Wah]

McDonalds...

better yet, Burger King $0.99 Chicken sandwich.

 

[Hamburgerpimp]

No, a 1.2Ghz Athlon is a necessity!!!

 

[Hamburgerpimp]

When you run your business on your computer, that is. Just cut the SOB up, all but one. That is all you need.

I called my credit card company up and asked them to reduce my limit from $5000 to $500. The first one I had they did not, then had to find one that would. Kind of sucks only spending $500 a month on a CC, but looking at my Ameritrade and Etrade accounts everyday makes up for it!! Then the money you make form stocks take over to For Sale/Trade forum!!

 

[SoyBoy004]

purchase a Certificate of Deposit which holds your money for a certain amount of time. or invest it somewhere, whether it be stocks, bonds, mutual funds, etc etc.

 

[OS]

<< cut up the cards >>



Is this really a good idea? I mean, hiding them away somewhere or not carrying them around I can understand, but somethings like plane tickets and car rentals you have to have a CC right?

 

[divinemartyr]

If your parents live close to you, and can be trusted (mine certainly can but I know some people's parents aren't as fortunate) then give them the one card you'd like to keep for emergencies.

If you can get a card with a high limit which can accept all of your balance transfers, generally they run specials for like 9 months at 2.9%. Do something like this if you can. If you can't, keep the balances on a few cards as possible, it's easier to pay off 2 than 5.

Carry cash with you when going to the grocery store. This is one place it's proven, people spend more money when carrying credit cards. Do not take your credit or debit cards to a bar either. You will spend more money. Only take what you want to spend before you go and you'll spend less and thank yourself later.

That's all I can think of off the top of my head. It's 2 am =(

dm

 

[divinemartyr]

If you really NEED to rent a car, this is the one thing I can think of where you should use a credit card. Debit cards are good for everything else.

dm

 

[fallenoncrack]

I wouldn't cut the cards, go to some debt management seminars and learn what the problem is, pay off your debt and get on track

 

[IBhacknU]

re: cutting up cards

I got this idea from someone here last year. Put your emergency credit card in a glass full of water and then put it in the freezer. You can still get to it for an emergency, but it won't burn a hole in your pocket.

 

[Aquaman]

Don't use any credit cards until you've paid them off. When I was in your situation, I put my cards in a bank safety deposit box. You could get to them in an emergency but not on a regular basis. Try getting a line of credit with a lower interest rate. My cards are 17% but my line of credit is 8%.

Cheers,
Aquaman

 

[Untamo]

Get more cards, run 'em up, max out your current cards - Hell get a loan even - Invest it foriegn trading to an offshore bank account - Fake your own death [You're spouse's too if need be] and relax in someplace were 70 Degree's is considered cold -

Or you can do it the hard way I suppose.

 

[Stallion]

The Wife and I both have 1 CC each but we do not use them unless we absolutly need to. We are very fortunate to have no car payments or CC bills. The CC company will tell you that it's not $7000 you owe but only $50 a month which in turn will never go down to zero. If you have extra cash in the bank pay off the CCs ASAP. As you saving will only pay you about 3-5% at best but most cards charge from 12-20%. So you can see, keeping $3500 in the bank at 4% will get you little intrest while your CC will rack up lots of finance charges at 18% on $5000.

This is something I was told long ago by a Friend. If you see something you really want then try to wait for 2-3 weeks and if you still want it as bad then go get it. he also said that if someone comes to your place selling you something you don't need it and if you did you would of went out and looked for it yourself.

 

[kranky]

Some good advice here already.

The key is your comment &quot;the urge to spend&quot;. You need to master that urge once and for all or you'll be back in debt down the road. Like stallion said, if you want something, wait a couple weeks and see if you still want it that bad. Chances are you won't.

Figure out the reasons you spend. Depressed? Want to show off to friends? Trying to impress girls? Bored? Once you know why you buy stuff you don't need, you're on your way to overcoming that urge.

To get out of debt, write down a plan. Really - write it down. &quot;I will pay $XXX a month on Card Z&quot;. Use one of the calculators mentioned to determine how much it will take to pay off the debt. If you can do it in a year, great. If you don't think you can do it in a year, make your plan to do it in 18 months, or whatever. Just be sure you can accomplish your plan. Each month as you meet your goal you will be reinforcing your ability to control your finances.

What will NOT work is to say &quot;I need to pay $500/month for 12 months&quot;, then in the second month only pay $300 hoping to make up the difference next month. You'll be undermining your plan.

Best of luck to you. The debt monster and the urge to buy can be really tough to get under control, but it's achievable.