I took up Accountancy in college. After graduation, I reviewed for the board examinations and, fortunately, passed the board to become a Certified Public Accountant (CPA). I managed to land a job at a prestigious accounting firm. But prestigious doesn’t translate to a high-paying job. My salary was minimum wage that time.
I made a promise to my parents that I would help send my siblings to school. So when I began working for the accounting firm, I would give most of my salary for my siblings tuition fees. Maybe, you would ask yourselves how I managed to help when I was barely making enough for myself. Well, credit card companies began calling one after another, offering pre-approved credit cards with close to three times my take-home pay. I accepted three credit cards, and managed to drown myself with debts in the process!
I juggled payments. It still boggles my mind how I managed to do that during the early years of my credit card debts. I managed to dodge collection letters and calls by paying the minimum amount due of the three cards. But as you all probably know by now, paying the minimum is like trying to stay afloat in a quicksand. It will slowly eat you alive.
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For those of you in the same predicament I was in, let me help you through these three steps I did in order to survive and, eventually, get out of my credit card debts.
Compromise. Talk to the collection department of the credit card companies, tell them that you are willing to discuss the ballooning amount of your credit card debt, and ask for consideration. They are willing to talk to you on settlement terms. You can compromise with them, you just need to reach out and show the sincerity of your intention to pay off your debt. Believe me, they are willing to compromise. If you want to consolidate your debts, do so. Learn more on how you can utilize debt consolidation.
What happened to me: I called up the credit card company if the card I had the biggest debt with. They told me to pay a small percentage of my total debt, and after complying, they allowed me to pay off in installments. The penalties and surcharges were waived and I was asked to pay off a reduced amount of credit card debt. After paying it all off, they issued a certification to me saying that I no longer have any liability to the said credit card company.
Budget. You need to use whatever tool at your disposal (a planner, a spreadsheet, a budget tracker app, etc.) and make sure to include the credit card debt amortization to your monthly budget. Control your impulses. Do not be swayed by sales promotions online. Do not spend what is allocated for your credit card payment. You need to religiously meet their due dates in order to maintain your good credit standing.
Check your monthly spending. If you can cut down on weekend getaways for a while until you manage to pay off at least fifty percent of your total debts, do so.
What I did: I created an Excel spreadsheet. Every start of the month, I would put the bills and amortizations I needed to pay. When salary came in, I would pay off bills and amortizations first before setting aside a portion for my siblings’ tuition fees. I brought home-cooked meals to work and I stopped buying pricey cups of coffees. It worked for me.
Reduce and Stop. Temptations are everywhere! And most of the time, it is in the form of a pre-approved credit card arriving through the mail. Do not activate it! Immediately call the credit card company to advise them that you are not interested and that you will be cutting the card in two. Stop applying for new credit cards because it will only sink you deeper in debts.
Keep one credit card for emergency use. Choose one which will give you rebates and good credit card rewards.
It was hard. Believe me, it was really hard! But surviving my credit card debts is one of my achievements in my adult life. Those collection calls… I think I had trauma from it. Phone calls make me nervous. I am just grateful I managed to survive and came off it a better manager of finances.