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5 Tips for Recovering From Credit Card Debt

May 23rd, 2013 Personal Finance

If you aren't exactly money savvy, you might be one of the many people who has to live with credit card debt on a daily basis. There's a certain amount of appeal that comes with credit cards - you can spend now and pay later. However, it's not uncommon for account holders to slip up and fall behind when it comes to making up for the cash they spend. Over time, credit card bills can pile up and result in an ample amount of debt, which makes it difficult to borrow money in the future. 

That being said, it's never too late to revamp your strategy, start paying off your debt and get your finances back on track. Even if you have thousands of dollars in credit card debt, there are a few ways you can begin to improve your situation. Here are a few tips you can use to start.

1. Take a step back and reassess the situation U.S. News & World Report recommends reassessing your finances if you aren't sure where to begin. This means looking at your debt, as well as your money management strategy, as a whole. Once you understand the magnitude of the situation, you can start to take steps toward recovery. You'll need to grasp the severity of the issue before you can truly become motivated to make a positive change.

2. Find where money is leaking To make your debt elimination efforts worthwhile, you'll want to ensure that the problem isn't getting worse. This means finding out where you're losing money each month, whether it's through frivolous spending habits or your cable bill. By identifying where your cash is going, you'll have a better idea of how to maintain your finances and save money moving forward. It might take time to narrow down these little leaks, but the sooner you do so, the quicker you'll be able to rebound financially.

3. Talk to your creditors The U.S. Federal Trade Commission states that in order to give yourself a fighting chance for improving your finances, you'll need to talk to your creditors. Needless to say, they may not all be sympathetic toward your debt, especially if they haven't seen a payment from you in months. However, credit card companies might be able to work with you on your debt and figure out how you can reduce it over time. For example, they may have information on various payment options available to you that you were initially unaware of, which can be helpful.

4. Consider credit counseling Let's face it - you might simply be inefficient when it comes to handling money. However, you're not alone, and there are many services available if you're interested in seeking more insight into the matter. Professional credit counseling can be a helpful option if you're lost as to where to begin tackling your debt. Additionally, seeking a secondary source can increase your chances of avoiding more debt in the future. 

5. Pay the minimum If you're more comfortable with taking baby steps, Bankrate recommends at least paying the minimum on your bills until you can afford to put forth additional cash. This can help you avoid increasing your debt and making it tougher to come out of in the future. 

While no one wants to be in debt, many people take on the risk of acquiring it when they use credit cards and other forms of lending. However, debt doesn't have to consume your life, even if you're an avid plastic user. These key tips can help you recover financially and get your money in order sooner rather than later.