If you're in debt, of course you want to get out.
And if you have masses of debt that you're not sure you can dig out of, finding a means to consolidate credit card debt may be the way to go.
This can help you lower your interest rates on your existing debt, if you know what to do.
Now, you hear about companies that are willing to work with creditors to help you consolidate your debt; this may be a good way to go in some cases, but most of those companies are fly-by-night and border on the illegal.
Point blank, they're all for profit for themselves, not to help you.
They may even rack up your debt instead of helping you pay it off.
Fortunately, there's a better way to go if you want to consolidate your debt.
Using a Balance Transfer Credit Card for Debt Consolidation One easy way to do debt consolidation is to transfer balances from a current high interest card to one with a low-interest or no-interest "teaser" rate.
The caveat here, of course, is that you have to pay off that card before you lose your no interest or low interest rate.
This method of paying off your card balances has a warning, though; it's very easy to open up a new card, transfer your balances, and then presto, you have an empty card with no balance on it.
Now, of course, the prudent thing to do would be to cut it up, freeze it in an ice block in the freezer, or something else that makes you unable to access it.
However, if you transfer one card's balance to a lower APR credit card, it's very tempting to simply go run that card's balance up again.
This is something you absolutely cannot do.
Things to Do After You Consolidate Your Debt Here are several things you have to do if you're consolidating credit card debt by transferring balances: 1.
Stop spending on your cards.
Stop completely, right now.
If you're in over your head, consolidating your credit card debt is not going to help you if you keep adding to the pile.
Remember that the consolidation is meant to help you dig out of your current debt, not to help you get more.
But that's exactly what you're going to do if you're not careful and you don't leave your cards alone from now on, at least until you have paid off your debt completely.
2.
Don't close the accounts of the cards you've transferred balances from.
Yes, they're sitting there empty, and yes, they're tempting you, but they're also going to hurt your credit score if you close them.
So keep them open, but cut up the credit cards themselves.
3.
Set up a budget whereby you pay your basic expenses like food, rent, car payments, student loan payments, etc.
Then, stick 10% of your take-home income in savings and leave it there so that you have something to fall back on in case of an emergency.
The rest goes toward paying off your consolidated debt so that you get it paid off before your teaser or introductory rate is over and it jumps back up to a more realistic interest rate.
If you wish, you can set aside $10 a month to buy yourself something frivolous that you've always wanted after you've done a good job for six months.
That sounds small, but you know what? If you got into debt because of a bad shopping habit, you've got a problem with delayed gratification.
This is exactly what you need to learn if you're not going to get yourself in trouble again.
So saving $10 a month to buy yourself something nice six months down the road once you've made decent progress and just as a reward is going to teach what delayed gratification is.
And trust me, that $60 "paid with cash" gift to you is going to feel a lot more special and a lot more earned then all of the "bling" you may have bought that you didn't earn.
And when you get there, a credit card balance at zero is going to feel even better.
So keep up the fight.
And if you have masses of debt that you're not sure you can dig out of, finding a means to consolidate credit card debt may be the way to go.
This can help you lower your interest rates on your existing debt, if you know what to do.
Now, you hear about companies that are willing to work with creditors to help you consolidate your debt; this may be a good way to go in some cases, but most of those companies are fly-by-night and border on the illegal.
Point blank, they're all for profit for themselves, not to help you.
They may even rack up your debt instead of helping you pay it off.
Fortunately, there's a better way to go if you want to consolidate your debt.
Using a Balance Transfer Credit Card for Debt Consolidation One easy way to do debt consolidation is to transfer balances from a current high interest card to one with a low-interest or no-interest "teaser" rate.
The caveat here, of course, is that you have to pay off that card before you lose your no interest or low interest rate.
This method of paying off your card balances has a warning, though; it's very easy to open up a new card, transfer your balances, and then presto, you have an empty card with no balance on it.
Now, of course, the prudent thing to do would be to cut it up, freeze it in an ice block in the freezer, or something else that makes you unable to access it.
However, if you transfer one card's balance to a lower APR credit card, it's very tempting to simply go run that card's balance up again.
This is something you absolutely cannot do.
Things to Do After You Consolidate Your Debt Here are several things you have to do if you're consolidating credit card debt by transferring balances: 1.
Stop spending on your cards.
Stop completely, right now.
If you're in over your head, consolidating your credit card debt is not going to help you if you keep adding to the pile.
Remember that the consolidation is meant to help you dig out of your current debt, not to help you get more.
But that's exactly what you're going to do if you're not careful and you don't leave your cards alone from now on, at least until you have paid off your debt completely.
2.
Don't close the accounts of the cards you've transferred balances from.
Yes, they're sitting there empty, and yes, they're tempting you, but they're also going to hurt your credit score if you close them.
So keep them open, but cut up the credit cards themselves.
3.
Set up a budget whereby you pay your basic expenses like food, rent, car payments, student loan payments, etc.
Then, stick 10% of your take-home income in savings and leave it there so that you have something to fall back on in case of an emergency.
The rest goes toward paying off your consolidated debt so that you get it paid off before your teaser or introductory rate is over and it jumps back up to a more realistic interest rate.
If you wish, you can set aside $10 a month to buy yourself something frivolous that you've always wanted after you've done a good job for six months.
That sounds small, but you know what? If you got into debt because of a bad shopping habit, you've got a problem with delayed gratification.
This is exactly what you need to learn if you're not going to get yourself in trouble again.
So saving $10 a month to buy yourself something nice six months down the road once you've made decent progress and just as a reward is going to teach what delayed gratification is.
And trust me, that $60 "paid with cash" gift to you is going to feel a lot more special and a lot more earned then all of the "bling" you may have bought that you didn't earn.
And when you get there, a credit card balance at zero is going to feel even better.
So keep up the fight.
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