By Frank Jones on January 1, 2012
.jpg.aspx) In just six easy steps you can negotiate your own credit card debt settlement, save hundreds of dollars in interest payments, and boost your self-esteem. OK, so the six steps aren't exactly easy in the sense that you won't have to do any work. However, they are easy in the sense that it's not exactly rocket science. Although the work you put into it does result in your saving hundreds of dollars in interest payments and the satisfaction of paying off your debts is sure to boost your self-esteem.
Step 1: Gather all your bills
Before you can begin any conversations about credit card debt settlement, you must first develop a picture of your current debts. This will require you to gather the latest financial statements for all your accounts. This includes credit card debt as well as utility bills, medical bills, mortgage statements, savings & checking accounts, and any other account statements you have.
Step 2: Organize you bills
Organizing your grocery, fuel, auto repair, and other miscellaneous expenses can seem quite difficult at first. However, computers are very good at helping out with tasks like this these days. Rather than tallying these expenses by hand, you could simply use the national or regional averages which are only an internet search away. Alternatively, you could use desktop financial management software or a specialty website like Mint.com to track these expenses over time. Given the tools available, this is one aspect of debt consolidation that you can easily do for yourself.
More specific to your credit card debt negotiation will be the most recent credit card statements. These should be sorted according to interest and fees. Those cards which are currently charging the highest fees and interest should be settled and payed first. This allows you to snowball your efforts by reducing the compounded interest payments each month.
Step 3: Create a plan
After you have a decent picture of your current debts, you will need to combine this with realistic expectations of your income and required expenses. Just because you create a budget to get out of debt does not mean that you can no longer have fun, simply that you must be aware of your spending habits. By being aware of what you are spending, when, and why, you will be able to pay off your outstanding debts more quickly. Look at creating a budget a a road map or a plan which will lead you out of debt. This may include some lifestyle changes but you should ensure that some portion of the budget deals with entertainment and miscellaneous expenses in order to ensure you stay on track.
This is a large part of what most debt negotiation services can do for you. Creating your own budget is a great way to avoid the bogus debt negotiation services. Another great option is to solicit the help of non-profit financial services in your area.
Step 4: Negotiate your credit card debt settlement
Once you've created a budget and found some discretionary spending which can be diverted toward repaying your credit card debt, you can begin calling your credit card companies to negotiate a settlement. You should begin by contacting the company which charges you the highest interest rate and fees. Many times these companies will settle the debt for 40% – 60% of the account balance. However, keep in mind a credit card settlement is not the same as paying the debt in full. This is a better option than allowing the debt to be charged off, but, as the name implies, this is still a settlement.
With holiday spending being one of the largest contributors to credit card debt, debt settlement is one New Years resolution you could stick with. As you pay off or settle the debt for each of your credit cards, you should work your way from those with higher fees and interest rates down to those with the lower fees and rates. This will allow you to hasten the process of paying off your debt and save you money over time. Additionally, you should always request a copy of the settlement agreement in writing.
Step 5: Stick to your budget
Once you've created a budget and negotiated a settlement with your credit card company, stick to it. If you back out of the settlement then the credit card company will continue to request the full payment. At times it may be difficult to curb your old spending habits, but you should remember that your budget is a guide to free you from your debt. However, it is also important to include some wiggle room in the form of entertainment and miscellaneous expense categories. Don't go crazy with these expenses, but do include some fun in your budget.
Step 6: Bask in the glory of your success
When you look back on your credit card debts and see only $0 balances you should fees a strong sense of pride and accomplishment. Paying off a mounting pile of credit card debt takes planning, hard work, and perseverance. This is a task which scares everyone, but you can do it.
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