There is no easy way to learn how to manage credit card debt, especially if you are already underwater.  

Any debt problem is composed of two parts, and both have to be addressed. First, you are sitting on a pile of debt for a reason. If bad spending habits aren’t sorted out, there is no way you will ever get on a better path. Learning to spend intelligently is taking your first step to a stable financial path.

The second part of how to manage credit card debt is looking for a way to make it cost as little as possible. There are lenders who specialise in offering loans to people who have stacked up high-interest credit card debt and need a way to knock down what they are paying in interest every month.

If you find yourself struggling to keep up with your payments or find it impossible to make any headway in your financial life, there are options out there. You will probably have to make some lifestyle changes, but that should come as a relief, as your current financial habits have gotten you into a stressful situation that is probably out of control.

How to Manage Credit Card Debt – Spending

Unless you learn how to keep your spending in line with your income, you will always be behind. If you are still able to access credit, spending more than you have means that your debts will continue to grow.

There are many ways to cut your spending. The recent movement by younger people to retire as early as 40 years old (called the ‘FIRE’ movement) can offer you some good ideas when it comes to making every dollar matter.

While there are entire books on the subject (not a bad idea to read one or two) the ideas that the FIRE movement uses to achieve a much higher savings rate are simple. In order to slash spending, you need to cut the things you don’t need from your life and save money on the necessities.

Don’t Eat Out, or Order Take-Away

We all need to eat, but cooking for yourself is one of the best ways to save money for most people. If you are curious about where all your income is going, start adding up what you spend on food every week, and also where you spend that money.

You might be thinking…‘ but I don’t have time to cook!’

Well…you are wrong.

The thing is, most people don’t know how to plan a week of meals, and then do loads of cooking in one day. If you are short on time, make a bunch of food for the week, then sock it away in the fridge.

Taking food out of your refrigerator is a lot cheaper than ordering take away from a local shop, and you can pocket the savings to pay down your mounting debts. 

Concentrate on Your Needs (Not Your Wants)

People have a very hard time telling the difference between what they want, and what they actually need. For most people, housing, clothing, transportation, and food are all that they really need, and the rest of their spending just goes to things they want.

If you are spending more then you make, you need to take a look at where that money is going, and how you can spend less. It is a very good idea to start keeping track of your spending and see what you simply don’t need to be buying. A budgeting calculator can help you learn how to monitor your income and expenses. 

How to Manage Credit Card Debt – Interest Payments

Thankfully, the debt side of your financial life is likely much simpler to get under control than your spending. If you have been racking up credit card debts, there is a good chance that you are paying more than 10% per year to service that debt.

The simple solution is to take out a loan from a company that specializes in making high-interest debt turn into lower interest debt, by consolidating your debt load into a single loan with a lower interest rate.

Be sure to burn all your credit cards once they are paid off, and never apply for new ones.

Taking Control of Your Financial Life

If you take a look back at what got you into the financial position you are in, it will become apparent that it was a long and complex process. Getting out of debt, and on to a better path won’t be simple, but there are some easy ways to get started.

One of the most important things is to limit the amount of money that is going to interest payments, as that money will never do a thing to help you get ahead.

If it seems like your situation is hopeless, don’t worry. With some spending discipline, and debt consolidation, you will be able to start making a dent in the money that you owe, and in time, start saving for your future. 

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