The long-held belief that ostriches bury their heads in the
sand when scared or threatened turns out to be a myth.
Unfortunately, many humans do the same thing -- figuratively, at
least. The source of our fear: credit card statements.
Your debt isn't going anywhere
No matter how many debt-collection phone numbers you block or how
many debt-related emails you leave unread, your debt will not
magically disappear. Ignoring it is probably making it worse.
Compound interest can be your friend or foe. When you're in debt,
it's your foe.
Credit card companies have incredible tenacity. The only way
to get them to leave you alone is by paying off what you owe.
The good news is, you can turn your debt situation around. It
will probably turn out to be a pretty expensive life lesson, but
it's going to be OK. Let's get a handle on your debt and pay it
That's easier said than done -- I don't have the money to
pay off my debts!
We'd all pay off our debts if we had the means, right? Perhaps,
but many people may have the funds available and don't even
realize it. If you've been dodging your debt, you probably aren't
paying very close attention to your finances in general. Here's
how to get started:
1. Figure out the damage.
Open up the letters and emails, answer the debt collection calls,
and pull your credit reports. You can't make a plan to get out of
credit card debt until you know exactly what you're dealing
Write down whom you owe, what you owe, and how much it's
costing you. List these debts from highest interest rate to
lowest -- this is the order in which you'll pay them off.
That thing you were so afraid to do? It's done.
2. Look at your budget.
Take your monthly net income and subtract all of your monthly
expenses -- both fixed and variable. How much is left over? This
number should cover your minimum credit card payments and then
some. If it doesn't, or there isn't as much "then some" to throw
at your debt as you'd like, you have three options -- make more,
spend less, or both.
Make more money by asking for a raise, working overtime,
getting a second or third job, freelancing, or starting a
business with low start-up costs in your free time. Cut expenses
by evaluating all bills, cutting out what is unnecessary, and
reducing excess if you need to. If you really want to attack your
debt, make more
3. Talk to your creditors.
You've been dodging them for a while, but the best thing you can
with your creditors. There's a person on the other end of the
phone, and he or she will be more likely to work with you if you
lay out your plan for repayment. In the future, always do this.
It will make your financial life so much easier.
4. Get to work.
It's time to pay off the debts. The money left over after you pay
your monthly expenses should be going toward your debt with the
highest interest rate. Make minimum payments on all of your other
credit cards while focusing on this target debt. Once it's paid
in full, focus your efforts on the next debt on your list.
If you use a debt payoff calculator, you'll be able to
estimate how long it will take you to pay off debt using your
current payment plan. However, you may find you end up paying off
your debt even faster. Sometimes, money seems to appear when
you're determined to reach your goals. Use cash windfalls -- gift
money, tax refunds, rebates -- to pay down even more debt, and
you'll probably be debt-free ahead of schedule.
The bottom line
The only way to deal with credit card debt is to face it. Figure
out what you owe, come up with a budget, communicate with your
creditors, and then pay it all off. The ostrich approach won't
solve any of your problems. Get your head out of the sand, and
get your financial life together. After that, you won't have
anything to hide from.
*Nerd note: Ostriches actually run when they're scared or
threatened. Don't do that either. Ostriches are proving to be
terrible role models. Fortunately, they aren't eligible for
Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the
typewriter, the VCR, and the 8-track tape player. When it
does, a handful of investors could stand to get very rich.
You can join them -- but you must act
new presentation reveals the full story on why
your credit card is about to be worthless
new presentation reveals the full story on why your credit card
is about to be worthless -- and highlights one little-known
company sitting at the epicenter of an earth-shaking movement
that could hand early investors the kind of profits we haven't
seen since the dot-com days.
Click here to watch this stunning video.
Try any of our Foolish newsletter services
free for 30 days
. We Fools don't all hold the same opinions, but we all believe
a diverse range of insights
makes us better investors. The Motley Fool has a disclosure
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights
reserved. The Motley Fool has a