Debt Clear Direct

There is a thing as what the experts call the problem solving process. This is a systematic method for solving problems that you always use to go from the starting point where the problem is to the ending point where the problem is resolved. There are six basic steps to the problem solving process and none of them can be skipped. They are

1. Recognize the problem

2. Define the problem

3. Propose solutions

4. Identify risks and costs

5. Select the best solution

6. Implement the solution.

This process always works because there is no room for emotions, excuses or procrastination. You step from the first phase to the last in prompt fashion and the problem becomes solved.

Many times when it comes to credit card debt, people dont like to recognize the problem. In 12 step programs like Alcoholics Anonymous, the first step is always to just recognize that you have a problem. And this is very often the biggest obstacle for someone who is seeing their credit card debt begin to take over their lives.

The credit card companies are no help. They like nothing more than to do all they can to make you incur more and more debt. It isnt necessarily that they are evil but this is how they make a living. The money from the interest you pay on your credit card debt goes to pay for the houses, meals, college educations and fancy cars of many credit card company executives. That alone should make you want to pull the plug on this grand scam called credit card debt.

Lets call a spade a spade. Credit card debt is a loan that you dont have to fill out any more paperwork than just to get the card. Once you have it, the credit card companies are thrilled to jack up your credit limit to where you can buy more and more and more all the while your interest rate creeps up too. Before long the debt level is huge and you are sending them hundreds of dollars and a big part of that payment is the interest.

Interest is money that doesnt buy anything. It is money the credit card company gets for doing nothing more than housing your debt. If we could get perspective on credit card debt, we would see that there is no rational explanation why one credit card can charge 5% interest and another one charge 25% interest. The credit card companies owe us no explanation of what that money goes for.

Its not like when you buy a loaf of bread that may cost one dollar for one kind of bread but three dollars for another kind of bread. In those cases you can easily see that the higher priced bread is of higher quality, tastes better or is more nutritious than the cheap bread. You literally get more for your money. When a credit card company charges you a higher rate of interest, there is no increased value for what they give you. They dont give you anything. If a credit card company raises your interest rate from 10% to 20%, you dont get twice as much good service or any kind of product for that extra money that are taking out of your product.

Then how can they get away with it? They do it because they can get away with it and theres no indication that any governmental body is going to make them stop. They get away with it because we dont get outraged and drop them when they cheat us like that. And they get away with it because credit card debt is a jail cell and we cant get out.

The purpose of this discussion is to get us to step one of the problem solving process. It is to make us aware that we are being had and to make you good and outraged. If you are outraged that you have a problem, then you can move on to step two and there and four and look for a solution and then do whatever it takes to make that solution happen. And when you do that, you are well on your way to springing open the door of the jail cell of credit card debt and walking away a free man or woman, hopefully never to go into that jail again.

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Credit card debt is the kind of thing that can go from a convenience to a cruel taskmaster in a short time. Very often the reason you may have a credit card debt problem may not be anything bad about you. It only takes a few bad breaks to drive your debt level dangerously high. Some unemployment, a few high medical or home repair bills or other unexpected expenses and before you know it, you have a big problem.

There are a lot of advertisements for credit card debt consolidation. The first word of caution we all should have about using these services is be careful. A good rule of thumb is that if they have money to advertise on television, they are going to make money off of you in some way shape or form. If you have bad credit and few resources to tap to get that problem under control, the interest rate on the debt consolation could be just as much of a prison as the debt itself. But there are good services out there too so just shop wisely.

So its a good idea to have a strategy for taking no credit card debt and starting to turn the corner on dealing with the problem. And part of that strategy is using the resources you have. The biggest asset you may own is your home. Now, most of us are hesitant to use our homes as collateral to get our credit levels down. But if you have a fair amount of equity in your house, it can be a tool to get a second mortgage that has a favorable interest rate that is capped so it doesnt float up and down at the whim of the lender.

A good place to start finding a good home equity loan is the lender who is handling the loan now. If the company that handles your finances now is doing a good job and doing business with you openly and fairly, you can get to them to negotiate a loan that both gives them some interest to make the loan worthwhile to them but gets your debt level under control. So if you can put all of your debt under a 30 year home equity loan at an interest rate sometimes 5-10% lower than credit cards, that frees up your budget to handle your expenses and start to see daylight on getting out of debt.

Another option for getting your credit cards under control is a credit management service. These agencies will take all of your outstanding credit card bills and work with the lenders to come up with a payment plan so they know they will get paid but the amount you have to put out is manageable by you. Again, these services will have fees but if they can at least put a fence around your rapidly expanding credit card debt situation, it might be a fee worth paying.

The important thing about you taking the first step of seeking help with your credit card debt is that you are taking charge of the situation. Too often, we feel hopeless and develop a victim mentality when we see those debts just keep going up knowing full well that at some point the monthly payments will overwhelm us. Reaching out to skilled and qualified services that can give you back some feeling of control over your debt can be liberating to you and give you hope that there may come a time when the trap of credit card debt still holds you captive. And that will be a wonderful feeling of freedom when you finally get free and are able to live within your means again.

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There is no question that having some credit cards is a great way to pay for things that is more convenient and even safer than always paying cash. And it really isnt practical to pay with everything by check because so many purchases would be slowed down by that method or retailers just dont accept them like they used to.

In many cases, having a credit card is down right necessary. Any more buying gas involves using a credit card at the pump which saves time and effort. And because a credit card always delivers a report to you at the end of the month in statement, its an easy way to keep track of how you are spending your money.

The problem comes when you spend more on the credit card than you can repay. Unfortunately, credit card companies are not there to keep you from living beyond your means. If you make your payments on time and are a responsible credit card owner, they will keep increasing your credit limit so you can charge all you want. But when the debt level on those credit cards becomes a debt you carry from month to month, that is when credit card debt can get out of control.

You dont need to be told that good financial management is the key to keeping your credit card debt problem at bay. But sometimes the bills stack up and circumstances beyond your control call on you to use that extra credit and you end up with a credit card bill that is becoming uncontrollable. That is when you have to turn to alternate methods to build a route out of debt and back to a firm financial footing.

One of the real culprits of getting out of debt to the credit cards you own are the high interest rates that are often charged to service that debt. If you have to pay 15%, 20% or more for a large credit card debt, the amount you pay in that actually brings down the principle is so small that the time when you can expect to be debt free is far into the future.

So the first step is to move that debt to a credit vehicle that is more manageable. There are a number of ways to do this using resources you may already have at your disposal. Many turn to a second mortgage on their home. By working with your mortgage company, they can advance you another loan based on the amount of equity you have in your house and that interest rate can be capped at a reasonable level so you can pay down that debt and not keep fighting that ever rising interest rate problem.

You can also look at your life insurance to see if you can draw a loan against that accumulated value. If you have been paying on it for many years, a life insurance policy that carries value such as a whole life policy may have enough equity that you can use that money to leverage your debt and retire the credit card debt entirely. You may still have to face a regular payment to pay off the life insurance loan but it is manageable and something you can budget against which puts the control back in your hands.

A third option is to use a professional debt consolidation company. This is yet another credit resource who will be making money from the loan via interest. But this kind of agency is not a credit card company so they will just loan you enough to retire your debt and then work with you to work down that debt while living within your means otherwise.

Once you select the right route out of debt you are going to use, its important you do not let that credit card debt climb up again. Learning good budget skills and working to keep your lifestyle within your means is crucial to not only getting out of debt but staying that way. But with good money management, a responsible debt consolation plan working for you and a mature approach to your finances, you can see daylight on getting out of debt once and for all.

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