If your finances are not just messy, but causing anxiety attacks, then it’s time to go into EMERGENCY mode. If you can no longer meet the minimum payment or you are continually forget payment for one credit card or another, it’s time to go into EMERGENCY mode. If you are dead serious about getting rid of this dead albatross around your neck and you want it done quick, then you might consider some of these EMERGENCY measures.
However, I want you to understand and accept that there are some financial situation that you can NOT handle on your own. These are rare, but they exist. If your health or well-being is jeopardized by your financial situation, then please seek professional help.
f you think you can handle it on your own and you are committed to, then read on. NOTE: I’m not a kind person. I don’t kid around. There are some harsh ideas in here, but if you are now in a financial emergency, then you must treat it like an emergency.
Emergency Debt Management
- Know Thy Debt: Gather all your most recent credit card and other debt statements together. List them by name, type, total balance, and minimum due. You need to know the monster you are fighting before you can fight. Are you able to make the monthly minimum payments? Then KUDOS! You are in a good place. If not, then find out why. If it’s a matter of simply not having enough money, then don’t worry, continue reading, you will get ideas on what to do to get enough money to meet the minimums.
- Least to Greatest: Arrange your debts from the least to greatest according to the outstanding balance. Different folks have different suggestions for how to arrange your debt, but I know that the younger we are, the more impatient we are to kill these debts. Arrange your debt from least to greatest so that you can get rid of the smallest debt quickly, see immediate progress, celebrate, and be motivated to work on the next smallest debt.
- Negotiate Lower Interest Rate: It’s time to call the credit card company and ask them nicely to lower your interest rate! The higher your interest rate, the higher your minimum payment and less of your money is actually working to lower your balance. You want that interest rate to be as low as possible, single digits or even zero percent. Call and ask for the supervisor immediately. Don’t bother with peons. Nicely ask for a lower interest rate. State that you are having difficulty meeting the monthly minimum payment (truthfully or not) and rather than defaulting, you want to be able to continue to pay. Threaten them with moving your balance to a competing credit card company who offered you a lower interest rate. You will usually get a lower interest rate simply by asking nicely. There are companies who are just HARD! You may have to follow through on your threats by transferring your balance elsewhere. If you have room on your other credit cards, call them up and see if they’ll give you a deal if you transfer your balance to them. If you don’t have room, then you’re out of luck. Since we are in EMERGENCY mode, chances are, you don’t have the credit-worthiness to apply for another credit card in order to transfer the balance. Don’t apply for a new credit card, that’s just more trouble down the road.
- Pay the Minimum: Yes, pay the minimum! No matter what, pay the very minimum on all these credit cards. If you had called up the credit card companies and convinced them to lower your interest rate, then there is a little breathing room. Do not slack off, pay the minimum on all your cards at all time! Arrange for automatic payment through your bank or through the credit card companies. I’m assuming here that you have the funds necessary to meet the minimum. If you don’t, read on for more suggestions.
- Pay MORE than the Minimum: The idea here is NOT to maintain your debt, but to get RID of your debt. You will have to pay more than the minimum! Where are you getting the extra money? You already have it! When you negotiate a lower interest rate, your minimum payment is lowered as well. The difference between your new minimum payment amount and your old minimum payment amount is what will get you out of hot water. Every month, pay all the credit card companies the new minimum amount, but heap all the “extra” money, meaning the difference between the new and old minimum amount, on your smallest balance credit card. The extra amount will quickly add up and KILL that small credit card. Then, take all your freed up money, the difference between the old and new minimum PLUS the minimum payment on this now defunct credit card, and apply it to the next credit card on your list. THAT credit card will soon be gone because you are. Do you see where we are going with this? Without need new sources of income, using just what you have now, you are going to systematically kill off one credit card after another.
- Pay EXTRA: In order to really get rid of your credit cards quickly (and for some people, quickly means in five years), you will want to apply extra money to the balance. Where will you get the extra money from?
- Hold a garage sale: Gather all the stuff you purchased using your credit cards and sell them! I kid you not. Sell all those books, clothes, toys, extra T.V.s, radios, computers, programs, everything that is not absolutely essential! We are in a financial EMERGENCY and we don’t want to stay there. Sell everything that’s not essential. You will easily make hundreds of dollars because we young’ins just love to gather crap that we don’t need. Sell textbooks online. Post on craigslist.org. Hold a good old fashion garage sale. Clear out the lovely, yet useless furnitures. Bookshelves, gone. Extra lamp you don’t turn on more than once a week, gone. The five backpacks that you don’t use, gone. I won’t be surprised if by doing this, you have enough money to kill one credit card immediately!
- Live a STERILE existence: Yes, it’s time to live the life that you actually can afford. You are probably in this mess, same as me, because you want to live the life to which your parents accustomed you (or should have). Now, it’s time to live the life that you can afford. The sad fact is, you CAN’T afford much! And with credit card debt hanging over your head, you can afford even LESS! This is motivation enough to get rid of credit card debts so that you actually have MORE money to spend on yourself! No more luxuries! No more movies on Friday nights. No more dinners out, period! No more lunch at the nearby fast food joint. No more manicures. No more hair-cuts. No more shopping, obviously. These are all things you CAN’T afford. Really, think about it. Were you ever able to pay for these things with cash or only with credit card? If you haven’t got the cash, you can’t afford it. If you have the cash, but you can’t pay the minimum on the credit card, then you can’t afford it. If you have the cash, can pay for the minimum on the credit card, then use most of the cash to pay down the credit card, and maybe treat yourself once in a long while. Just remember, YOU CAN’T AFFORD IT! Don’t fool yourself or your friends into thinking that you can. You can’t.
- Get a JOB: Yup, time to get a job in order to pay the debt monster. Even if it’s only babysitting one day a week, it’s a job that will bring in extra money to help pay down the credit card debt. And know that this money is NOT for you to spend. You’ve already spent this money when you used your credit cards three years ago. Time to payback what you owe. Maybe keep a small percentage, say 10%, for yourself, but otherwise, send it off to the credit card companies immediately.