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#234 – 5 Strategies to Escape Credit Card Debt
Episode 2341st May 2024 • Money Boss Parent • Anna Sergunina
00:00:00 00:17:15

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Popular Debt Management Strategies.

1. Debt Settlement:

Debt settlement involves negotiating directly with creditors to pay a reduced amount on your credit card debt. It's not guaranteed to be accepted by lenders and can negatively impact your credit score. It's not the quickest method and typically involves fees ranging from 15% to 25% of the settlement amount.

2. Credit Counseling:

Credit counseling is suitable for those who can manage their debt but need some guidance. Credit counselors educate and help devise personalized debt management strategies. Although many offer a free initial session, ongoing services may involve fees. The National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of America (FCAA) offer accredited counseling services, potentially including free options.

3. DIY Debt Management:

This approach involves handling debt reduction personally, without professional assistance. It's a cost-effective method where individuals create budgets, cut expenses, and monitor their credit reports for errors. It's suitable for those comfortable with managing their finances independently.

4. Debt Consolidation Loan:

Debt consolidation loans combine multiple debts into a single loan with potentially lower interest rates and one monthly payment. This can simplify debt management and reduce the number of payments. However, there might be origination fees, and the loan term could extend the debt repayment period.

5. Credit Card Balance Transfer:

This strategy involves transferring existing debts to a new credit card that offers lower interest rates, often with a 0% APR introductory period. It's a popular method among Americans for managing credit card debt and can provide significant interest savings during the introductory period. Websites like Nerdwallet offer resources to find suitable balance transfer cards.

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Websites Mentioned on the Show: has a great resource for finding a 0% credit card to transfer your balance.


Anna Sergunina:

Hey Money Boss Parents, Anna here and welcome back to the Money Boss Parent Podcast. Today, I want to talk about ideas I have to help you escape the credit card debt, inflation has become an unwelcome guest for all of us here in the United States and worldwide. And one of the things that we feel a lot of it in real life, not just when we go to the grocery store, or we buy other goods, it also how and when we look at our credit card debt, and a recent survey by, paints a really stark picture with 45% of Americans are turning to credit cards more frequently due to the inflation. And because the cost of credit has increased not only due to inflation, but higher interest rates. This is sort of this vicious cycle. And this episode, I want to explore the repercussions of the inflation on credit card and how we, if we had acquired the debt, how do we navigate and elevate this burden on us and figure out a way out of this situation. So getting out of credit card debt, I love different statistics, because it helps me kind of get a sense of where the information comes in, but also gives color to the topics we're talking about.

Anna Sergunina:

So I want to talk about five different ideas that you may want to explore. If you finding yourself that all of a sudden you do have balances on your credit card survey found that 58% of Americans have never tried possible solutions I'm going to discuss to get out of their debt. And I find this interesting too, in conversations with clients that a lot of times we sort of take it for granted that like maybe perhaps there's tightness in our cash flow or life situations like job changes, or job losses, or whatever it is unexpected circumstances and we find ourselves that we are having credit card debt. And so what this is this survey found, which is very true, in my experience is that we kind of like just say, All right, well, I've got a credit card debt, and I'm just going to work on paying it off. And that is great, right as like the first step to, to resolving this situation. But many really never look for alternative ways. And sometimes it kind of can get you derailed off the track, and present a lot of unpleasant situation. So let's talk about what can you do when you find yourself in the situation because credit card rates are in double digits and high double digits 20%, a student as high as 27%. And for a lot of you, that is something that we want to try to minimize as much as we can. Now, my message today is that credit cards are not evil. But using credit cards as a tool in your overall financial system is great, because there's ways you can earn rewards miles cashback gives you the flexibility and security of paying for things without having to carry cash or use your debit card. So that is not the point. The point is that how do we become more strategic and clever to pay off the debt on the credit card balances that we might be carrying?

Anna Sergunina:

Now one of the things to consider with with this option is that there are typically charges that you pay upfront so even though they're offering you 0% I mean nobody's gonna give you free money like it just doesn't work like that. We'd like to believe Good, but it doesn't work like that. So there will be some some small amount of transfer fees. And I've seen all kinds of stuff over the years 2% 3%. But something upfront, which is, when you look at the situation, in the grand scheme of things, it is much better right than paying 20 Some percent on a credit card. So consider that as an as an option as well. Also, if you haven't gotten any kind of offers in the mail, you can you can go to, again, my favorite sites for a lot of credit cards, and other kinds of plate, you know, topics for sure, but, it has a great resource for finding these zero credit card transfer balances. How much you want to get is never guaranteed. It all depends also on like, what your available, you know, credits how well your credit history has been doing, like what's the utilization like are your credit cards, maxed out what your income is. So like a lot of this will play into the account because you are actually applying for a credit card. And so you may end up having to do a couple of these all together. But it is an option that exists in this ecosystem. So my friends, the there you have it five different ways how you can navigate this topic of like getting rid of the credit card debt, even in an environment where interest rates are high. And so I just challenge you to not just like if you find yourself in this situation, let's let's not keep our head in the sand and start thinking about strategically. I know that that can feel overwhelming. But if you know the proactive strategies, you can start to get ahead of all of this. Let me know what questions you have.

Anna Sergunina:

All right, my next strategy, which I think I want to kind of put higher on the list would be to figure out your own plan. So do it yourself plan of getting rid of this debt. And I think that this is probably one of the more time consuming and maybe at the same time, a little bit more expensive ways just because it's going to take you time right to figure this out in and if you're resourceful enough. There's lots of tools online one of the ones that I like to consider and I've done episodes on this in the past on this podcast, but because Consider coming up with a plan, whether you're using a snowball type of debt payoff option, or an Avalanche Method, and the difference between the two is like, Are you paying your highest debt? First in terms of interest? If you have a couple, or are you focusing on paying off the debts that have the smallest balance has a calculator that helps you figure out what makes the most sense. And you can actually see how fast you would be able to pay these debts off. So do it yourself plan in my mind really consists of a couple of components, figuring out which way you're gonna approach this debt, definitely getting a good handle on your spending and where all your real cash flow is going. Because if you're trying to find extra money, that would be one that you would refer to and, you know, really, really having a strict budget, if for the time being while you're working on that debt. Also, I want to add, and this is more of my ideas to, to this all overall conversation. From the study, I think they should talk more about, everybody should talk more about how can you increase your income, because if you can increase your income, not just by cutting down your expenses by making more money, you have a lot more chances to get rid of this debt faster.

Anna Sergunina:

Thanks for tuning in. Please don't forget to subscribe and leave us a review. I always love to get those comments from you. It helps to think about ideas for the show. And just really hear from you and know that you're out there listening and enjoying these kinds of conversations. Until next time, remember you are the bosses of your own money.





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