Money Talks: I am in major credit card debt and I don't know how to begin to pay it back
'Every time I receive a bill I feel like I am going to have a panic attack.'
I am going to begin with two major words of advice for this reader – stop spending! This is the first sensible move you need to make to begin your path to a debt and stress-free financial future.
I have seen it many times. People do not think anything of buying themselves the odd treat and putting this ‘little debt’ on their credit card but when this then becomes senseless uncontrollable spending, it usually means the beginning of a personal debt crisis.
Debt, when planned and budgeted for like a personal loan for a car or a house extension, is acceptable but debt arising from the overuse of credit cards to purchase items you ‘want’ rather than ‘need’ is indeed a problem.
Ignoring this situation and not taking immediate action now will mean serious damage to your credit rating or even worse the banks can initiate legal proceedings against you to recover the debt which could have more serious repercussions.
Start to tackle your debt by making a list of your outstanding balances. Then contact the banks concerned without delay to proactively engage with them in terms of setting out a clear solid plan to settle your debts within your means over a realistic time frame.
One option to consider is cancelling the credit cards, consolidating all the debt and then taking out a personal loan to pay off the outstanding amount over a certain time frame.
You could also look at moving the credit card debt to another provider with a 0% APR for a certain period and vow to pay the debt off over this time and then cancel the card.
If you are adamant about paying off the debt and sticking to the agreed plan, sacrifices will certainly be necessary during this phase. Until you clear the debt, I would vow to try and not pay for anything unless it is for food or essential bills at least until you have cleared the debt completely.
Should this situation still seem too daunting to tackle on your own or you feel overcome in any way by the situation, do not worry there is plenty of further professional assistance available to you. I would reach out to MABS who are specialists in guiding people on how best to deal with debt or alternatively contact a personal insolvency practitioner.
I wish to sincerely re-iterate to you that by taking immediate action now, communicating with your banks and putting together a solid plan of action, you will see your debt shrink very soon and when you start to see this, the sense of satisfaction and relief that you will feel will serve to keep you motivated well beyond this situation and will mean that you will have much more control over your finances, in general, moving forward.
- Carol Brick, Managing Director of HerMoney has over 20 years of experience in the provision of professional Financial Advice see hermoney.ie
