If you need help paying credit card debt, you may face drastic changes in your lifestyle. MSN Money columnist MP Dunleavey points out, "Extreme debt calls for extreme measures." There are ways to get help paying credit card debt while ensuring that you pay for the essentials in life--and preserve the integrity of your credit report. Your first order of business should be to realistically assess your level of debt and the likelihood that you'll be able to pay it off using your current strategies.
Pay Off Credit Card Debt
Step 1
Don't believe in an "easy fix." Contrary to the promising and prolific ads that abound on the Internet, there are no government grants or federal monies stashed aside to help you pay credit card debt. The Federal Trade Commission indicates that these are scams designed to drain your pocketbook in exchange for information that you can easily access online--and in some cases, the personal information you supply these enterprises are disseminated to identity thieves. Grants.gov, the official online portal where all government grants are listed, states unequivocally that federal money cannot be used to pay off personal debt.
Step 2
First try to help yourself. The financial experts at Credit.com indicate that a "do it yourself" strategy may help you if you have a manageable amount of credit card debt and are both organized and diligent (see Resources). Evaluate your credit card debt and take a hard look at your budget to see where you can trim back on discretionary spending so you can pay back the debt. For example, Credit.com suggests canceling your cable television service. Make it a goal to pay more than your monthly minimum payment on the credit card debt with the highest interest rate while making the minimum payments on all others. Once you've paid off the account with the highest interest rate, tackle the credit card debt with the next-highest interest rate. During this time, use cash only. Don't accrue any more credit card debt.
Step 3
Look into other options while you're paying down credit card debt. Credit.com advises seeing if you can negotiate with credit card companies to reduce your interest rates or settle your debts at a lower rate. You may also be able to transfer outstanding debts to a credit card with a lower balance, consolidate credit card debt by taking out a personal loan, or use the equity in your home to pay off the debt. However, each of these methods comes with certain risks and may not be an option for you if your credit report is already sullied. (See the "Debt Help Comparison Chart" in Resources below for more information.)
Step 4
Get professional financial guidance if your self-help strategies fall through. Seeking services through a member agency of the National Foundation for Credit Counseling is a good place to start. Your credit counselor may simply design a better budget for you or suggest enrollment in a debt management plan (DMP); these programs, managed by credit counseling organizations, are often appropriate for consumers carrying a heavy load of credit card debt. However, the NFCC indicates that a DMP isn't always the best solution for everyone who seeks credit counseling. A reputable counselor will take a look at your finances and present an array of options best suited to your situation.
Step 5
Make radical lifestyle changes if your debt management strategies aren't paying off. As Dunleavy points out, when a large amount of credit card debt needs to be paid, these simply may not work. Some of the methods Dunleavy suggests to save money to pay credit card debt are: are moving to a cheaper house (or getting a housemate), selling one of the cars, taking a second job and curtailing vacations and other indulgences. Dunleavy advises selling your assets and tapping into "nest eggs" if you must--although retirement funds should be left alone.
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