CASH MONEY: Is credit card debt kicking your ass? Time to get creative
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I’m sick of reading financial advice columns that tell you all you need to do to crawl out from under a mountain of credit card debt is live more frugally.
Quit eating out, they tell you. Don’t buy new clothes, and stop going to the movies. Before you know it, they claim, you’ll have those nasty, high-interest cards all paid off. Easy, right?
Nope. For a lot of us, it isn’t.
Not when you’re already eating ramen three meals a day, wearing thrift-store threads and your sole source of entertainment is watching shitty network TV. If you’re in your 20s or late teens, chances are you’re already living pretty frugally, and those credit card payments are still eating you alive.
Of course, there’s no substitute for writing up a budget, sticking to it and looking for ways to cut back. But sometimes that’s not enough. You have to look for other creative ways to cut credit card debt out of your life.
If you’ve already cut back, and it’s still not enough, here are some solutions you may not have thought of. Some may even seem to go against conventional financial advice.
Use the snowball method. “Snowballing” is when you use the credit card with the lowest interest rate to pay off debt on your higher-interest cards. Go step-by-step, paying down your high-interest cards first and working up to the lowest one. You’ll be surprised how much difference it makes to consolidate that debt at a lower rate.
Cash out your savings account. I know, I know. Everyone in the world has told you not to touch your savings. Squirrel it way, they’ve told you, because you’ll need it for an emergency. Well, when you’re buried under a shit-ton of credit card debt, I think it qualifies as an emergency. There’s little likelihood your bank is paying you nearly the sky-high interest rate the credit card company is charging on your debt. You’re also young. You have time to rebuild your savings.
Come up with your best sob story and renegotiate. Credit card companies aren’t exactly a sympathetic bunch, but they are greedy. Use that to your advantage. They know that if you file for bankruptcy, they’ll get a fraction of what you owe them, maybe nothing at all. So call them up, tell them you’re not sure you can keep your head above water at the current rate and that you think bankruptcy may be your only option. Sometimes they’ll change your payment schedule or even drop your rate.
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