These helpful tips on credit card consolidation can help you when you’re trying to make decisions on the best credit card debt elimination program. Getting rid of your credit card debt is one of the best choices because they usually have the highest interest rates as compared to other loan types such as school loans or mortgages.
Controlling your Spending
Many people overspend because they don’t keep track of how much they are spending. You need to sit down and spend the time to understand your financial picture and prepare a realistic budget.
Use a budget worksheet to calculate your monthly income and expenses. If you are using a professional debt consolidation service, the consultant at the consolidation company may guide you on how to best budget your income and expenses. Having a realistic budget will help you avoid defaulting on your loan, during the time you’re following a credit card debt elimination program. Once you have a budget, do your best to stick to it and manage your finances better.
Set up an Emergency Fund
Besides tips on credit card consolidation, it is also a good idea to keep an emergency fund set aside in case of job loss, illness, major car repair, or other events that can catch you off guard and drain your savings. Emergencies can happen to anyone at any time and you will feel more secure if you know you have a few months of savings set aside.
You may also face a natural disaster or family health problems that can quickly drain your finances so it is better to prepare some savings to deal with life’s unexpected issues. When budgeting your expenses each month, just keep aside some percentage of your paycheck for emergencies. You should try to save as much as possible, but 5-10% is a good idea. The rule of thumb is to have three to nine months of savings set aside as a buffer. If you don’t have any, it is never too late to start. If you can’t save 5%, try to save whatever you can, just put something aside.
Reduce Use of Credit Cards and Loans
When you’re following a credit card consolidation program, don’t accumulate even more debt. Don’t keep using your credit cards and other loans or you will just add more weight to your existing debt problem. You don’t need to close all of your accounts; just set the cards aside for the time being or cut them up to prevent yourself from being tempted. You may choose to leave one credit card open just in case you need it for emergencies, but only use it if you absolutely have to, not for frivolous purchases! Make sure you’re able to keep up with your debt payments, so you will be able to get out of debt as quickly as possible.
Credit Card Consolidation Alternatives
Beyond credit card consolidation, there are a few other solutions to help in resolving credit card debt. These tips on credit card consolidation include:
A debt settlement is another credit card debt reduction program, and it may seem more suitable if you have too much credit card debt, and want to reduce your outstanding balance. In this case, a credit card debt relief company will work with creditors or with collection agencies in order to reduce your debt. Typically, this is up to 40-60 percent of the original balance.
Credit card debt management is another good option. You consult with a professional counselor to learn about your options. This certified debt counselor will help assess your financial situation. The counselor may also negotiate with your lenders and help to get a rate reduction, as well as help you get more affordable payments.
Contact a debt management professional and check the Better Business Bureau to make sure you are dealing with a reputable firm.
These tips on credit card consolidation should help you get back on track. A credit card consolidation program is no doubt the best way to consolidate credit card debts. But you can benefit from it only when you have the planning and determination to make it work for you. You must learn to live within your means and stick to a budget. If you lack discipline, you will find yourself right back in debt again.