Many people began their financial trouble with the easy access to credit a few years ago. Every day, it seemed, there would be at least one new credit card offer in the mailbox. They would advertise zero interest but, after a late payment, the interest rate would jump sky high. Before long, even meeting the minimum payments became a problem. It’s time to find a solution. Different forms of Credit Card Debt Help are available.
Set Up a Budget
Whatever ultimate credit card debt solution is chosen, learning to live on a budget is the best way to stay out of financial trouble in the future. One simple way to budget is the 50/20/30 budget. It may be helpful to have the 50% fixed cost bills paid with an automatic deduction. Having the 30% flexible spending available as cash in an envelope will make it easy to keep track of how much is left and how to allocate it.
- 50% of take-home pay is set aside for fixed costs. This would include mortgage or rent, utilities, gym memberships – any bill that stays about the same.
- 20% would go toward financial goals, such as debt payments, retirement, and building an emergency fund.
- 30% is flexible, being used for gas, groceries, eating out, hobbies, clothing, etc.
One solution to debt is credit card consolidation. There are two types of consolidation loans: secured and unsecured.
- A secured loan is available to homeowners with equity in their homes, and it offers a way to pay off the debt with a lower payment and interest rate. It puts the property at risk if the loan can’t be repaid.
- Some lenders offer debt consolidation loans for bad credit. These debt consolidation bad credit loans typically have a higher interest rate than the secured loans, but will still have a lower monthly payment and interest rate than the combined credit card payments.
Personal Informal Agreements
If there are not very many creditors, it may be possible to negotiate an informal agreement.
- This offers a temporary solution for a short-term problem by extending the time, freezing the interest, or settling for a reduced amount.
- If any creditor does not agree, they can continue with whatever collection action they were pursuing.
This is a legally binding agreement reached with the majority of creditors that will apply to them all. It allows the debtor to consolidate credit card debt and pay it off with one smaller monthly payment.
When seeking debt consolidation bad credit, not all lenders will offer the same solutions. A poor credit history will limit the available options, but a solution can be found. Whatever solution proves to be the right answer for you, find a budget that works, set up an emergency fund and enjoy your financial freedom.