One of the biggest financial mistakes people make is to confuse having credit with having money.
What's the difference?
Well, if you have money, it means you can pay cash for things you purchase. If you have credit, it means that you have the ability to buy something even if you don't have the cash, at least right now.
There's certainly nothing wrong with using a credit card. Many cards come with perks, or allow you to get discounts at certain stores.
But many credit card companies offer cards with low interest rates or high credit limits, giving you the impression that you can spend up to your limit, and can afford to use your entire credit limit. You might become tempted to use your card whenever you want to. Because of this, you might not be aware that your credit card debt is getting bigger and bigger. Or you might not be aware that you actually can't afford to pay off the card. Then by the time you know that you are in big debt, it's too late. And you're stuck with a pile of debt far more than you can afford.
And the more cards you have, the greater the chances of making this kind of mistake!
So what can you do when you wake up one morning and realize your debt is more than you can handle? First of all, don't panic. Instead, you need to take steps to own up to this fact, and start to fix it. Here are 5 tips for getting rid of your mountain of credit card bills:
1) Accept the fact that you are in debt.
Sounds obvious, right? And some people might may say that this is useless. But the first step to fixing any problem is admitting you have one. When credit card bills come due it's much easier to pretend there's no problem. But this is simply a defense mechanism when you can't accept reality. Some people might even just put the bills aside where they can't see them to avoid reality. Sorry, but this won't help you. Running from your problems won't solve them, it will just make them harder to solve. And make you debt grow bigger and bigger. So be honest with yourself, and you'll be taking a big first step!
2) Don't hide your bills, hide your credit cards.
Stop using your credit cards and put them somewhere else where you can't easily find them. When your credit cards are in your wallet, the urge to use them becomes hard for you to resist. Especially when money is tight. So put them somewhere safe and don't use them. Stick them in a drawer, or safe deposit box. Or give them to a friend or family member (someone who you can trust and be sure they won't use them!). You can just keep one with the lowest interest rate and lowest debt in your wallet, in case of emergency. Like they say, out of sight out of mind. If you can't see these cards, you won't use them. And when you don't use them, your debt will stop growing, and you can start fixing the problem.
3) Don't buy what you don't need.
away a little money each paycheck, and start getting used to paying with cash. It's a great feeling, and will become a good habit before too long. Credit cards are not money. They are not cash. And using them too much can get you deeply into debt. So make a deal with yourself to only but what you really need, and what you can really afford.
4) Make a list of all your debts.
Seeing how much you owe will be surprising, especially if you've been running away from your debt problems. Use this list as a guide to help you start paying off your debts in order. Start with the card with the lowest balance, so you'll see quicker results and hopefully stay motivated. Make sure to make the minimum payment on each card. Then pay as much extra as you can towards the first one, until it is paid off. You won't get out of debt overnight, but you didn't get into debt overnight. But stick with this plan, and you will start seeing your progress pretty quickly.
5) Reward yourself.
If getting out of debt is all work, you won't be likely to stick with your plan for very long. Take a small amount of money each month and put it into an envelope which you can use to treat yourself to something fun. You can buy whatever you want, as long as you have the cash, and as long as you are making progress towards paying off your bills.
Kris Bickell runs www.Debt-Tips.com, a website that offers helpful tips & information for getting out of debt, fixing your credit problems, and saving money.
What's the difference?
Well, if you have money, it means you can pay cash for things you purchase. If you have credit, it means that you have the ability to buy something even if you don't have the cash, at least right now.
But many credit card companies offer cards with low interest rates or high credit limits, giving you the impression that you can spend up to your limit, and can afford to use your entire credit limit. You might become tempted to use your card whenever you want to. Because of this, you might not be aware that your credit card debt is getting bigger and bigger. Or you might not be aware that you actually can't afford to pay off the card. Then by the time you know that you are in big debt, it's too late. And you're stuck with a pile of debt far more than you can afford.
And the more cards you have, the greater the chances of making this kind of mistake!
So what can you do when you wake up one morning and realize your debt is more than you can handle? First of all, don't panic. Instead, you need to take steps to own up to this fact, and start to fix it. Here are 5 tips for getting rid of your mountain of credit card bills:
1) Accept the fact that you are in debt.
Sounds obvious, right? And some people might may say that this is useless. But the first step to fixing any problem is admitting you have one. When credit card bills come due it's much easier to pretend there's no problem. But this is simply a defense mechanism when you can't accept reality. Some people might even just put the bills aside where they can't see them to avoid reality. Sorry, but this won't help you. Running from your problems won't solve them, it will just make them harder to solve. And make you debt grow bigger and bigger. So be honest with yourself, and you'll be taking a big first step!
2) Don't hide your bills, hide your credit cards.
Stop using your credit cards and put them somewhere else where you can't easily find them. When your credit cards are in your wallet, the urge to use them becomes hard for you to resist. Especially when money is tight. So put them somewhere safe and don't use them. Stick them in a drawer, or safe deposit box. Or give them to a friend or family member (someone who you can trust and be sure they won't use them!). You can just keep one with the lowest interest rate and lowest debt in your wallet, in case of emergency. Like they say, out of sight out of mind. If you can't see these cards, you won't use them. And when you don't use them, your debt will stop growing, and you can start fixing the problem.
3) Don't buy what you don't need.
away a little money each paycheck, and start getting used to paying with cash. It's a great feeling, and will become a good habit before too long. Credit cards are not money. They are not cash. And using them too much can get you deeply into debt. So make a deal with yourself to only but what you really need, and what you can really afford.
4) Make a list of all your debts.
Seeing how much you owe will be surprising, especially if you've been running away from your debt problems. Use this list as a guide to help you start paying off your debts in order. Start with the card with the lowest balance, so you'll see quicker results and hopefully stay motivated. Make sure to make the minimum payment on each card. Then pay as much extra as you can towards the first one, until it is paid off. You won't get out of debt overnight, but you didn't get into debt overnight. But stick with this plan, and you will start seeing your progress pretty quickly.
5) Reward yourself.
If getting out of debt is all work, you won't be likely to stick with your plan for very long. Take a small amount of money each month and put it into an envelope which you can use to treat yourself to something fun. You can buy whatever you want, as long as you have the cash, and as long as you are making progress towards paying off your bills.
Kris Bickell runs www.Debt-Tips.com, a website that offers helpful tips & information for getting out of debt, fixing your credit problems, and saving money.
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