Credit Card Debt Reduction System: How To Dig Yourself Out of Credit Card Debt

Have you succumbed to the lure of credit cards and found yourself in a bit of a pickle because of it?

Pull up a chair and have a seat ... 

Welcome to the ever growing club of consumer debt! 

Your biggest challenge now is to dig yourself out of this situation and avoid having to pay anyone to help you do it.

Based on original article by Peter Webber

How To Dig Yourself Out of Credit Card Debt - Table of Contents

What Are Your Options for Digging Yourself Out of Credit Card Debt?

The options at this stage are usually as follow (depending on the level of credit card debt):

• Consolidate your credit card debt into a loan
• Debt Management 
• Bankruptcy
• Do Nothing
• Just pay off the cards over as long as it takes
• Make the minimum payments and keep spending
• Make an effective DIY plan

The more popular solutions – such as consolidation loans and debt management – we see being touted and advertised everywhere are the ones that put your money in other peoples' pockets. 

I don’t know about you but for me becoming free from debt should not involve spending more money, or “borrowing your way out of debt”.

Debt Settlement vs. Debt Consolidation

Debt Settlement is also referred to as debt negotiation, negotiated debt settlement, and sometimes incorrectly called debt consolidation. Debt Settlement means that your debt is negotiated down to a reduced amount and paid off in a lump sum. 

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Settlement is one of the most effective choices available to consumers. It’s a great choice if you have more debt than you can pay off in 2-3 years. It's also a good choice if you are experiencing a financial hardship, and you're falling behind (or about to be) on your monthly payments. 

Why would creditors choose to settle debts rather than simply charge you interest and late fees over and over again? Creditors know that if you get into such a bad financial position that you can’t pay your monthly payments, not to mention the amount of money consumers pay in interest and promotional fees. That's why creditors are typically willing to settle for a lower amount, given your specific situation. 

DIY Debt Reduction System: 5 Step System

So how does a DIY system work?

To break it down into 5 steps it looks something like this:

1. Address your spending habits and why you are in this situation.
2. Know your options, the ins and outs of how they work – and why they are not for you.
3. Know your situation.
4. Minimize outgoings, Maximize income, and Leverage your cash flow.
5. Form your system and put it into action.

DIY Debt Reduction System Step 1. Address your spending habits and why you are in this situation

To ever win with money and have a comfortable financial future you have to control your money – not the other way round. Take complete control and set yourself some realistic yet desirable goals for the future.

DIY Debt Reduction System Step 2. Know your options, the ins and outs of how they work – and why they are not for you

Along the way you will be tempted by quick fix ‘make it all better’ solutions like consolidation loans and debt management. As mentioned already there is a multibillion dollar industry making a very healthy profit from consumer debt. Your DIY plan does not involve “paying to get out of debt”.

DIY Debt Reduction System Step 3. Know your situation

Any debt relief system requires a bit of budgeting. As long you’ve followed the rest of the plan so far, have desirable goals and no intention of taking an easy -and expensive – way out you won’t have trouble budgeting.

The other thing to know is your credit score. There are a staggering amount of mistakes found on credit scores that result in people paying more interest than they should. If you are eligible for lower rates and 0% APR cards to move expensive balances on to – you need to know about it.

DIY Debt Reduction System Step 4. Minimize outgoings, Maximize income, and Leverage your cash flow

If you could be paying less for utilities and day to day expenses you should. There is a very fine art of money saving that you will become very good at if you’re going to be successful at this.

Home economics, consumer education and bargain hunting can save you incredible amounts of cash that can go toward paying off your debt quicker.

If you’re really serious you can take it a step further and create a secondary source of income. Be it a second job, or using a natural skill/strength you have that can earn you money in your spare time.

With the opportunities available online it’s never been easier to find those who are seeking out some knowledge, experience and skills that you have and that they would pay you money for.

DIY Debt Reduction System Step 5. Form your system and put it into action

Having followed the first 4 steps and laid some sturdy foundations you are now in a position to develop a quite powerful ‘snowball’ plan. That is a system that gains momentum as you execute it.

This step is completely dependant on the first 4 steps and generating an extra figure that you can assign to snowballing your credit card debt. As the debts get paid off the figure grows and subsequently clears the rest of the debts a lot quicker – saving you a tidy amount of interest in the process.

It is very possible use a DIY plan and enjoy great success from it, yes it takes a bit of hard work and discipline on your part but the alternatives just cost you more and keep you in debt for longer.

It’s your money, it’s your life – if you want to truly own them both then you have to take control – not give it over to someone else. Control or be controlled, the choice is yours.

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Peter Webber is the creator of DIY Debt Busting Systems such as the Free 100% DIY Credit Card Debt Busting System which enables you to take complete control of your finances and become debt free as cheaply and quickly as possible.