Carrying a large amount of personal debt is always a burden. When it comes to starting or funding a business, reducing that debt can be essential if applying for a loan since your personal assets are often used in determining your financial worthiness. Plus, credit card debt is just one more financial headache when you’re managing business finances as well as personal finances, and who wants extra headaches?
Many of us have been there -- facing down (or ignoring) that giant credit debt monster -- and maybe even tackling that beast more than once. Fortunately, there are a number of resources and strategies that will help you to get your personal credit card debt under control once and for all.
Be brave and ask yourself the hard questions
Understanding your overall debt is the first step in erasing the balances. Ask yourself the hard questions:
Take advantage of free debt counseling
There are non-profit debt counseling agencies that will help you reign in your high balances. It may feel embarrassing or uncomfortable to expose your deep debt secrets to someone else, but they are there to help and not to judge. Look for non-profit agencies that don’t charge you for their counseling. You can find reputable agencies through the following two organizations:
According to the American Consumer Credit Counseling agency (which offers free counseling) these are the 6 things you should look for when choosing a credit counseling agency. It should:
1. Be a non-profit
2. Be in business for 7 years
3. Have a state license
4. Charge no minimum fees
5. Have certified counselors
Make a plan and stay motivated
With your debt counselor, figure out a plan that works best for you and your financial situation, and then keep at it until you reach your goal. Of course, that is easier said than done, so continue checking in with your counselor or someone else you trust who will keep you accountable.
When you’re facing years of paying down debt, it can be hard to stay motivated. It may help to visualize your debt reduction goals. Make a bar graph on a whiteboard or a poster representing your various balances and each month watch those bars lower. Add up all the monthly credit card payments you’re making now and imagine what you could do with that $200 or $2000 a month once your debt is gone. Think of it as giving yourself a raise!
Before you go
QB Community members, what are your ideas and strategies for keeping debt at a minimum and/or getting out of debt?