My Credit Card is Maxed Out – What Can I Do?
A maxed out credit card makes life more difficult and stressful. Therefore you need to figure out a plan on how to pay it off. We are going to discuss how to develop a plan and help with your maxed out credit card.
The first thing you need to do is to stop spending! This is very important so you don't keep adding to your debt. Don't buy unnecessary items. Take you credit cards out of your wallet so you're not tempted to pull it out at the store.
Another way to protect yourself from using your credit card is cut it up and put it in some water and freeze it. Either way you won't be able to use it to purchase anything quickly. If you freeze it, then you will have to wait for it to de-thaw. During that time process, you should really think whether you need that item.
Create a Plan/Budget
After you stop spending on unnecessary items, sit down and create a plan and budget. Write down all your expenses and sort them by fixed expenses and variable expenses. You know your fixed expenses are things such as mortgage or rent, car payments, utilities, etc. Then document all of your variable expenses such as gas, groceries, restaurants, etc.
Next you need to take your income and budget it out for each of these expenses. Now that you have a budget created, see if you have any money left or if you have over budgeted your income.
If you have extra money, then all of that should be put towards either creating a savings account or paying off your credit cards. It's important to create a savings account, if you already don't have one. This extra money will help you if something unplanned for develops. It may seem difficult to put money into savings while you still have a lot of credit card debt but it's important.
Take a small amount of what is left from your budget and place it in a savings account. The rest of it should be used to pay off your credit cards.
If you have over-budgeted your income, then you need to look carefully at each of your expenses and see where you can cut back. This is important to do, whether you have over-budgeted yourself or not. Can you stop eating out three times a week and eat out once a week instead?
What about taking your lunch to work, so you're not buying lunch every day? You can also use coupons for your groceries so you don't spend as much. Maybe you need to cut back on shopping for clothes or electronics. These are just a few examples of ways you can cut back. You need to cut back to where you can pay all your fixed and variable expenses and then have some left over to pay off credit cards and put into your savings account.
Balance Transfer Offers
Perform a balance transfer to a new credit card
If you have a high interest rate, it is sometimes hard to pay more than the minimum balance. Look to see if there is another card with a lower interest rate. Once you find a credit card with a lower interest rate, see if that credit card company will allow you to transfer your balance. Sometimes there will be promotional rates which only last for a certain amount of time and then are raised to a much higher interest rate. Watch out for these and try to pay it off before the promotion ends.
While having a maxed out credit card is no fun, it is possible to get out debt. But it's important that you start immediately by not spending any more money and creating a plan and budget. These two things are essential in your quest to pay off your debt. You can pay off your debt, sometimes it just takes time, but it is possible.
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