Passive Income

A few months ago I woke up and discovered that my credit card debt had spiraled out of control. It is easy to ignore the monthly statements, concentrating solely on the minimum payment due. I know, that is what I did. Before I knew it, I had racked up $8,700 worth of poor decisions.

The first thing you should do stop using your credit cards. Buy only things that you need and that you can afford to purchase in cash. I use a 2 week cooling off process. If I see something that I really want, I wait two weeks and see if I still really want it. If I do, and I can pay for it in cash, I may buy it. Many people ignore this step, concentrating on paying off their balance, only to find that in six months, they are right back where they started.

The next thing you should do is call your credit card companies and ask for a lower interest rate. You should also ask if they can offer you 0% interest for 12 months. Sometimes you will get a credit card representative that will not help you at all. Simply hang up and call again. You would be amazed at how different each rep can be.

If you do not make any progress with your current credit card companies, there are always companies DYING to get your business who will offer you 0% on balance transfers. I personally consolidated 5 cards three months ago. The interest rates were killing me, so the $75 fee they charged me was completely worth it in my opinion.

The final step is to pay as much as you can towards your new 0% credit card during the interest free time frame. I know I would rather spend the money on something I enjoy now versus something I enjoyed months, even years, ago. Unfortunately, you got yourself into the situation so now you will have to get yourself out. That is unless you can find yourself an “Angel Investor” like I did. But that will have to wait for another post.

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