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Credit Card Debt

How To Manage Credit Card Debt As A Family

If you really want to reduce your credit card debt, you can. But first you will need to take a cold hard look at what your credit report says.  This is vital information you will need if you are going to devise a strategy to reduce the debt.  From your credit report you will see what the three main credit bureaus have on record as your credit history, which credit cards appear there and which loans.

There may very well be errors that you can rectify such as accounts that have been paid and that do not reflect this on your credit history.

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Having noted which debts are reflected, which are payable and the outstanding bad debt credit card amounts list all of these and what steps you plan to reduce them. Compare the credit card fees, annual membership fee, penalties and most important, the interest rate you are paying at present to other credit cards on the market. If you credit card is higher than the others, get rid of the debt, now by taking the following steps:

Step 1:  Cut up the credit card/s. This will stop your urge to spend. Do you really need half the purchases bought on that card that you are still paying through the neck for?  If you really feel you should keep one for ‘emergencies only’ then keep the one with the lowest credit limit and the very lowest interest rate that you qualify for. But use willpower here. Remember, your goal is to reduce your credit card debt, not increase it

Step 2:  Try taking on a part time or 2nd job if time allows.  Or have a garage sale, an evening inviting friends and neighbours to come buy your unwanted goods, these are items that if you have not used them in the last year, you never will.  Make a promise to yourself, set a goal, with a time limit of say 6 months to a year, to be debt free. Then with this second income, pay your smallest debts off first. When these are cleared, use those amounts you were paying on the smallest debts to pay off the debt with the highest interest rate, normally credit card debt. This way you prevent the interest building up which is why you have credit card debt, the interest compounded, and you could not keep up. Pay the installment on the credit card/s plus the total of what you were paying on the smaller debts. Now watch your credit card debt reduce and give yourself a pat on the back.

Step 3:  Get your husband/wife/children together to plan a family budget. This has to be a democratic decision that all members in the household take part in to make it work. Then start trimming.  Do you really need to spend that amount of money on entertainment?  While you are in debt?  Rethink your lifestyle. Eating out costs a lot more than enjoying a family meal at home. Think about why you eat out, if it is to save on cooking, take turns with all members in the house having a turn to cook. They might surprise you. Even draw up a chart to see how much you are each saving and award the family member who saved the most that week with a treat. All that you have saved and trimmed, use towards cutting your debt. 
   
Step 4:  Appoint a debt monitor for each member of the family. This could be your husband or partner, and you will be their debt monitor. Do this for the children as well, as each person needs a check when things get out of control.  This will pull you up if things get too difficult to keep up, with all the trimming going on. If you get to a stage where you think, I have saved so much and surely I deserve that pair of shoes I saw yesterday, your debt monitor must approve it, but remember it will be at the rest of the family’s expense.  If they are saving and you want to splurge, it will not be fair.  

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