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1. Prioritize those bills
The first thing you need to do is prioritize your bills. Put them in order of those that are most important such as your mortgage payment or rent or an auto loan. These are the expenses that are toughest to cut. On the other hand, entertainment, cable and cell phone packages are ones where you could make cuts.
It's easy to prioritize credit card debts. You simply arrange them by their interest rates from highest to lowest. You may find there are huge differences between the interest rates you're paying on your credit cards. You might learn that you’re paying twice as much interest on one card as another. For example, as of this writing the Capital One Standard Platinum Card had an interest rate of 19.30% vs. the 7.40% you would pay on the Capital One Premium Prestige card.
2. Learn to negotiate
If credit card companies are constantly harassing you, you may feel that you have no recourse. But you might be able to negotiate a reduction in your interest rates. Just call the company that issued the card and ask them to lower your rate. The worst they can do is say no.
A second way to lower your interest rate(s) is to do a balance transfer. This is where you transfer the balances on credit cards that have high interest rates to one with a better rate. Almost all credit card providers have introductory offers. Many now have 0% interest balance transfer cards. If you qualify for one, you could transfer the balances on all of your credit cards to this new card and be interest free for as many as 18 months. However, be aware that many banks charge balance transfer fees of up to 3% of the total balances you’re transferring. You need to watch out for these fees as they could completely wipe out the savings you would achieve from making the transfer.
3. "Snowball" your credit card debts
When it comes time to pay off debt, the best thing you can do is “snowball” them. The way this works is that you do everything you can do pay off the debt with the highest interest rate, which will most likely be a credit card. When you have paid off that first card you will have more money available to begin paying off the second debt and so on. This is called "snowballing" debts because as you pay them off slowly month after month, your progress will get faster and faster. Every dollar you pay will lower your finance charges and free up money that you can put towards reducing your debts.
4. Stay on course
You'll find that snowballing your debts will get more comfortable as you get more used to it. Just make sure you don't get back into trouble. Keep paying off those debts and try to pay cash for everything possible. You may run into a financial emergency that could set you back a bit but don't worry. So long as you stick with the program you will eventually get out of debt. It will take discipline and some sacrifices but you'll eventually become debt-free and probably faster than you ever had ever imagined.
A better solution
f you’re six months or more behind in your credit card payments, it's way too late to snowball them. One good alternative is to choose debt settlement. You could contact a debt settlement company such as National Debt Relief to work with your credit card issuers to get your balances reduced. This could help you become completely debt-free in 24 to 48 months and with a monthly payment you could easily afford.