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How To Pay Credit Card Debt

Credit card debts cause stress, worries, fear and limit one's ability to enjoy life as a free being.  The problem is not the credit card itself, but how much debt one has piled on it.  Some people manage very well their credit cards, and find them really helpful.  Others do struggle to use them more efficiently.  Those people will eventually reach the crunch point where their purchasing power is squeezed to the point where there is no more money left to make ends meet.
In those circumstances, what should one do?  Do not jump in front a train or burn the house down.  Breath in and out.
Yes you want to pay them off and be debt free.  Sometimes people pay off those credit cards but two years down the line, they are again at the square one. 

So your goal is not really to pay them off, but to be able to control and manage the credit cards and loans

Practical Step One To Pay Off Credit Cards And Loans

Take a piece of paper and calculate the total amount that you owe to all credit cards companies.  Now write down that sum in bold and capital letters, and stick it up at a place where you can stare at it.  Now, admire it without any emotion or fear.  

One will never solve any problem by shying away from it.

Now that you know how much exactly you owe, you can now start doing something about it.  It does not matter how big it is.  Do not say, I am finished.  You created it, so you can destroy it if you truly make that decision.  Remember that our ultimate goal is to manage and control the credit cards debt.  You see, when one says my goal is to clear or pay it off and the amount is too high, one may end up saying those words I am finished.  You are not because you created them all, so you are in charge.  You will finished those bad habits off.

Practical Step Two To Pay Off Credit Cards Bills

Now that you know how much you owe in total, you want to know also how you get there.
Ask and answer correctly the following questions.
Who is responsible for that amount owed to creditors?
It does not matter what went on, who you want to blame, the correct answer is the name of the person on the credit cards.
One must take full responsibility if one truly wants to control and manage credit card debt.

How long did take one to reach that debt level?  This is an important question that one must answer correctly because it will be needed to determine how long it may take to pay off the credit card debt.

 Practical Step Three To Pay Off Credit Cards Creditors

One must determine how long one want to pay off the debt.  Practically, one must select three terms. A person may say, honestly, I would like to pay them off in seven, fourteen or twenty-one years.
Now give three terms that are suitable to you and note them down on a piece of paper.

Suppose it took you seven years of excessive spending to pile up that amount of credit card bills.
The minimum term to clear the credit card and loan debt will be seven years.  You pile it up in seven years, you may clear it in seven, but that is not the easiest term but only the minimum.

The next reasonable term to clear that credit card debt would be fourteen years.  Most people who have accumulated credit cards debt in the last seven year can clear if off in the next fourteen years. 

The third option is the easiest one.  It is the maximum period one will need to pay off seven years' credit card bills.  That is twenty-one years.  That is a long time in the life of a person.

So the general rule in this case will be
- pay it off in x years if it took you x years to create those credit cards debt
- pay it off in 2x years.  That is the reasonable route for those that under pressure.
- pay it off in 3x years.  That third term is for those who are near bankruptcy, but are willing to pay off their credit card and loans debt if given the maximum time to do so.

Note that those are my recommendations.
They are not set in stones.

Most creditors will be very pleased if you can clear off your credit card debt during the minimum term.  Few may resist the second option, but most will tolerate the last option if the amount is too high and one may file for bankruptcy instead of hanging on.

Important Point

To calculate the term it took to pile up the credit cards bills, one should always consider all credit cards as one.  Do not say four year for this one and six years to the other.  From the first credit card to the latest one, how long does it take in total to pile up the credit card debt?  That is it.

Practical Step Four To Pay Off Credit Card And Loans Debt

Now that you know how much you owe and how long you want to pay it off, you can decide how to achieve those aims.  So far you may be asking: will I ever pay off my creditors? Remember that your number one goal is to control and manage those credit card and loans bills and get on with your life.  The creditors will start respecting you when they see that you taking charge of the situation instead of running away from it.

Truly, times of overspending, excess, easy money and carelessness have caused you to get where you are today.  Never mind, that is the past.  Today, you want to change that.  It means changing your lifestyle.  It also means living within your means.  

At this stage, you want to take piece of paper and list all your income and expenditure side by side without cutting corners.  You can do that.  You are no more alone because with this article I am right behind you so to speak.

Next, go over each expenditure and see if there is room to reduce that amount.  Do it multiple times and sincerely.  Do not reduce the cost of any item on the expenditure list if you are not ready to do so. Try your best without  being delusional.

Now isolate the biggest expenditures.
Is the rent taking more than one third of your income?  Can you get another place that is cheaper? 
Can you find ways to save money on your household bills?  Look around a bit.

Obviously if you have been living above your means over the last seven years, just know that for another seven years at least you must cut down your cost of living, and change few habits. 

One can not carry on like it was before when one is trying to control and manage credit cards and loans debt

Are there few useless subscriptions that you have forgotten about, but are still taking money from your bank account?  Get rid of them.

Are there people or businesses that owe you money?  Well, it is time to do something about that. 

After all these things, you will know exactly what will be your exact outgoing and how much is left from your income. 
Congratulations, you are slowly but gradually taking control of your credit cards and loans debt.  In fact you are changing your habits and trying to deals with money matters more efficiently.  The focus is on you.  Well done.

Practical Step Five To Pay Off Loans And Credit Cards Balances

After the fourth step, one can calculate how much is left after deducting the expenditures from your total income.
We call it the net income.

The total expenditure does NOT include credit cards and loans monthly payment.
This is very important in step four.

Now what is your number one monthly income?
For most people, that will be their salary after tax of course.
Say your net salary (take home) is £2200.
Calculate £2200 times 18%.  Roughly, it is equal to £400.  In ideal world, that is how much one wants to pay in total towards monthly credit cards and loans outstanding balance.
No more in my experience.

The step five is about knowing how much one should allocate to credits and loans monthly payments as one is under a debt management plan.
My recommendation is 18% of your net main salary.  That percentage will allow you to safely take back control of your finance without dumping the initial debt management plan.

Step Six To Pay Off That Credit Card Debt 

In step four you calculate your net income.
It was total income minus all expenditure (without credits monthly payments).

In step five, you calculate your 18% of the net main salary (main big salary after tax).
For most people, the net income will be higher than that 18%.

Let's call that 18% monthly affordable.

Now calculate the difference between the net income and monthly affordable.
Let's call that difference Sweet Money.
For example, a person with a main monthly salary after tax of £2200 that has £500 as net income will benefit from £100 Sweet Money.
Net income £500 minus £400 monthly affordable is equal to £100 Sweet Money.

Practical Step Seven In Managing Creditors Bills And Debt

At this stage, you know exactly what you want to achieve and you have the data needed. Hopefully, there is also the sweet money.
Now look for a debt management company with a friendly approach.
This is crucial because instead of you taking all the creditors punches and threats of bailiff, the debt management company will handle all those issues.
You will be forwarding to them all correspondences from creditors.
You will pay a fixed monthly amount to the debt management including their own fees.
They will distribute that amount to all your creditors (credit cards and loans).

My recommendation is to pay the monthly affordable.

Practical Step Eight To Pay Off Credit Cards And Loans

I want to tell you few things that you must know so you do not get yourself into trouble.  Understand that this article is suitable to those who just want to control and manage credit cards and loans debt in a practical fashion.  People who genuinely want to pay off their debt at one point without taking individual voluntary arrangement (IVA) or file for a bankruptcy.  I believe that is you and your intention is honest.  You will be surprised by what I am about to say. 

1/ When you are talking to a debt management company, never say to them that your monthly payment will make your account go into the overdraft. Even if you are using an overdraft at one point to pay your monthly installment, you do not reveal that to them. 

That question will come over and over during most of your communication with them.

2/ You do not have to tell them your exact net income or send them your payslip.  This is about taking care of yourself, but with a good intention to clear that credit card debt.

3/ At the time your registration with the debt management company, you must detail in a booklet your total income and expenditure.  Do not include or mention overtime works.
Remember that the expenditure does not include the monthly payment to your creditors.  You want to do your homework so everything adds up and makes sense.
The idea is to be honest at heart, but also taking care of yourself so the ride may be smooth to you, creditors and debt management team.

4/ Your debt management company is likely to push you into IVA, but in normal conditions, one should make it clear that one wants to pay off creditors in full in due course.  I will not recommend the individual voluntary agreement (IVA).  

5/ When creditors call you, be sure to give them the contact numbers of the debt management company and tell them that they are the people handling your debt.

6/ Note down the details of all your creditors.  Their name, address, contact and amount owe.

I would prefer you have a notebook for that.  

6/ A creditor can sell the debt you owe to another financial company.  This is normal.  That new company will become your creditor.

7/ Do not pay off a creditor without doing through the debt management company.  They will like you for that.  

8/ Note that anytime you come up and say I want to pay off this or that creditor, the debt management company would like to know where that extra money is coming from.

A good answer to that question will be it is a birthday present.  Do not say you borrow it.

Say my relative X was helping me.

8/ You do not have to tell the debt management team if someone owe you money or if you have a pay rise.  Be honest, do not try to outsmart them because they are not stupid.

Be fair but take care of yourself.  

9/ Save a portion of your Sweet Money and do not just spend it all.  As long as your creditors are happy and freeze interest on all credit card and loans debt, be busy saving any extra money and use it in future to pay off low amount creditors first.

10/ There will be each year an annual review when the debt management company will review all your income and expenditure in view to see if there is a need to reduce or increase your monthly installment to your creditors.  

11/ Do not ask to reduce the monthly installment unless your income went down big time.

You want to pay off those credit card and loans debt as soon as possible. Don't you?

Practical Step Nine to Pay Off Credit Card And Loans Debt

The step nine is too important to be discarded.  Pay attention carefully.

Years or excessive spending and mismanagement have caused one to sink in an unbearable credit card debt.  To last step to control and manage those outstanding balances is to increase your income.  Is there anything that you can do to earn extra cash that you can save.  That could be doing overtime works each month or finding other sources of revenue.

The last seven years probably were just about spend, spend and spend.  Now, we want to do things differently.  We have already changed our lifestyle.  We are more disciplined and we are committed to learn how to control and manage credit card and loan debt.  

Do not take new credit cards and loans as you are under a debt management.  Stick to the plan but find ways to boost your income.


Anyone can follow those nine specific steps to pay off outstanding credit card and loans debt in a reasonable term.  One must stay disciplined and stick to the debt management plan.  

Be sure to find a good debt management company, and follow the nine steps to debt free.

It is my hope that this article will help you free yourself from the shackles of the credit card debt that you have let yourself into.  Learn from that experience and improve your ability to control and manage credit cards and loans debt without going back to the old ways.

Thank you for visiting.  If this article has been useful to you then feel free to share it on a social media.  I really appreciate that.