What to Do If You Can’t Even Meet The Minimum Payments on Your Credit Cards

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credit card stackIn an ideal world, you’d be far exceeding the minimum payments on your credit cards, but what do you do if money is so tight that even the minimum payments are out of reach? Many of you have faced a temporary situation like this at some point in your life, and it can take a toll on the other areas of your life when you know that you’re falling behind on monthly bills. As dire as the situation looks, you’ll be pleased to know that there are a few ways to get out of the mess without having to resort to the dreaded bankruptcy.

Stick Rigidly To Your Budget

If you’re struggling to make ends meet, take a good look at your budget. Unless you’re already living in an extremely frugal manner, you can probably find some ways to reduce your spending to free up that little bit of more money to throw at your credit card debts. Look at every part of your budget and see what can feasibly be cut or chopped out altogether until you’re in a better financial position. If you don’t have a budget at all, see our review of the You Need a Budget (YNAB) budgeting software, which can help you to create one with minimal effort.

Increase Your Income

It sounds incredibly obvious, but increasing your income is one of the best ways to help you meet your minimum payments if your income alone doesn’t stretch that far. For example, you may want to search around for a second job that fits around your primary one. Other ideas may include selling some of your possessions on sites such as eBay, Amazon or Craiglist or offering your services as a freelancer after your normal working hours. If you can increase the basic income that is coming in each month, you’re in a better position to meet your minimum payments, because there is a bit more room to breathe.

Use Savings

If you’ve got savings, use them to scrape the money together for at least meeting minimum payments and going beyond this wherever possible. The more you can throw at your debts, the quicker you’ll get them paid off, because the minimum payments are intended to keep you in debt as long as possible. It’s up to you whether you want to use retirement savings to do this, but bear in mind that it’ll reduce the amount of money that you’ll have later on unless you can catch up at a later date.

Reduce Your Fixed Expenses

We often overlook our fixed monthly expenses in terms of finding ways to reduce the amount of them. You could reduce your cable and/or internet package to save money. You can be more conscious of the electricity and water you’re using. Watering your lawn less and keeping the temperature in your home a little warmer in hot months and a little cooler in cold months can really help you reduce your utility bill. Shop around to get a better rate for your auto and home insurance. Also, take a hard look at your cell phone bill and your provider. Could you be paying less for your cell phone?

Reduce Your Variable Expenses

You don’t need to stop with every one of life’s little luxuries, but you can easily reduce your grocery costs, entertainment costs, and household expenses by cutting back temporarily and being more mindful of every dollar that you spend.

If you’re struggling to meet the minimum payments on your credit cards, don’t give up hope. Trim your budget as much as possible, look into increasing your income and use any existing savings to gather together money to throw at your credit card debts. Whatever you do, don’t be tempted to borrow more credit to meet your minimum payments, because this will create an even bigger mess in the long-term.

(photo credit: ohadweb)

  • http://madsaver.com Mac

    I’m always surprised to see some people who are having money problems fail to give up such luxuries like cigarettes (if you’d call that habit a luxury), satellite tv, alcohol, and lottery tickets. Such expenses should be cut immediately as none of them will help their financial situation. And there are still ample part-time jobs available too, as long as you’re willing to take a lower pay.

    • Karmella

      I think the part-time job availability might depend on which area of the country, as there does not seem to be high availability around me.

      • http://madsaver.com Mac

        Good point. The economy is probably better here in the midwest than other areas. Part-time positions are quite easy to come buy, as that’s how employers are saving money. Less full-timers, so less cost & less benefits to pay out, yet the work still gets done. Not quite as good of a deal for the employees.

  • Gina

    Although the prospects of taking on another job to raise income sounds glib, remember it doesn’t have to be forever! You can wait tables a few nights a week for a few months and it could get you through a tough period.

    • Winston

      I don’t think a lot of people see taking a second job as a glib thing to do when money is tight. What is really glib is when you work on your second job while you are working at your primary job.

      I find it a little surprising that people owing thousands of dollars still pay $50+ for cable services. If I am that broke, I will live like a monk until I get back on the right track.