Managing Your Credit Card Debt

Budgeting is all about keeping your expenses in tact. You don’t want to spend extra money on interest rates, reminders for paying your bills etc. I’m not a millionaire, I do have A LOT of credit card debt and I’m struggling to pay my bills. So there are people who argue I’m not the best person to give advice to others. Maybe, but I’m speaking about my own personal experiences. I’m writing my own personal story of how I have managed my finances AND avoided bankruptcy while struggling with unemployment and living and paying bills alone in the past seven years.

Here are some things I have PERSONALLY done to manage my credit card debt:

  1. Pay the minimum. If it is the only amount you can afford, negotiate the monthly instalments with your bank. You’ll pay more in interest rates, but sometimes you need to eat too. Also, it’s better that the bank expects you to pay the minimum each month, because it’s always better to voluntarily pay more if you can instead of negotiating each time with the bank if you can pay less.
  2. Utilize free months for your credit card bill. Most banks and credit card companies have this policy. You can have two or more months per year when you don’t need to pay the minimum on your credit card bill. Check with them ASAP and negotiate which months you would like skip paying the minimum fee. Notice though that the interest rate will be deducted from the next month’s instalment. This trick doesn’t save you money, but it simply helps you manage better your low finances for the month and get you back on track for the next month.
  3. Negotiate with the bank/ landlord/ credit card company/ shoe store. Where ever your debt is from, a credit card company, a bank, a phone company, a clothing store etc., you can always try to negotiate longer payment periods, monthly instalments or change the due date of the invoice. It might cost a little extra, but it’s worth not losing your credit record AND you get to keep your shoes and bread and milk. 🙂🙃
  4. Once you get a job, pay the whole credit card debt at once. I’ve had some random jobs in the past seven years while looking for a full time job and even though the pay has been total crap compared to what I should be earning, I’ve always been rational about paying my bills. If I have money, I pay them. If I don’t, I don’t have a choice but to use my credit card to buy food and it’s OK, as long as you pay the minimum each month. I did once the mistake of not paying my whole credit card debt when I could have, and it has been haunting me ever since. Of course when I use my credit card regularly, the debt never decreases.
  5. Pay off the debt with the highest interest rate first. I never had to think about it when I had a full-time job and had to unfortunately learn it while been unemployed. When I got some money from the company I used to work for, I thought I’ll pay ALL my debt and bills off at once. WRONG. Unemployment and the stress and loneliness of being bullied, discriminated in the job market and living alone took its toll on the money. So I decided to pay a little off (after my over priced rent) from my student debt, a little from my credit card debt, and took a nice vacation. What I should have done was 1. Paid the credit card debt in FULL off 2. Took a vacation 3. Paid my student loan. Yes, I put a vacation before student loan, because the interest rate is very low in the student loan. You need to have a stress-free mind to think rationally. So never underestimate the power of vacations and who knows what kind of cool people you could meet on those trips to share your bills and rent with. 😉

I hope this helps a little! Let me know your thoughts and comments. 🙂💰💰

credit card debt. budgeting. living within a budget.
Managing your credit card debt is important so you don’t pay extra in interest rates and worst case lose your credit record. 💳💸

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