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Declaring independence from credit card debt

For Michigan residents who are struggling with credit debt, this holiday weekend may be the perfect time to put into practice a few tips that could lead to freedom from debt.

One of the first things to do is simply stop using credit cards for additional purchases and charges. While this is not always easy, a side benefit of going to a cash-only spending plan is that using cash often results in less total spending.

Drawing up and maintaining a budget is also an important step towards paying off credit card debt. The budget should allow for a substantial monthly payment on a credit balance. Paying only the minimum will not reduce the debt quickly, and it will mean more interest paid in the long haul.

When cutting costs is not enough, it may be time to consider ways to increase income. Working extra shifts or getting a second job for a period of time can go a long way toward paying off debt.

For those who are still struggling to manage even after doing a budget overhaul, transferring balances to another card with a lower interest rate may be a viable option. In many cases a lower interest rate can save thousands of dollars in the long run. It is important to take balance transfer fees into account in calculating the savings, but even when those are factored in the net benefit can be significant.

Despite their best efforts, however, many people may still face overwhelming credit card debt that simply cannot be managed without some assistance. In such cases, a consumer bankruptcy may be an effective means of freeing oneself from credit card debt.

Source: U.S. News & World Report, "5 tips to liberate yourself from credit card debt," Lindsay Konsko, June 30, 2014.

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