Shit happens! Let me repeat Shit happens!

So you got into some personal financial mess – a big medical bill, a car repair, a personal loan to make that last mile for the down payment of a house, etc. etc. but you are now saddled with a big credit card debt.

I am not getting into the amount, but yes it keeps YOU up all night. Your wife knows about it, the kids are guessing something is wrong…and YOU are at your wits end. Let us see what you can do to come out of it:

1. Pay as MUCH as you can: Let us say your total amount out standing is Rs. 234,500. The bill at the end of the month will print a very attractive number, in bold saying : MINIMUM AMOUNT TO PAY: Rs. 23,450/-‘ . Do not be lured by this amount, PAY THE MAXIMUM amount that you can pay – Rs. 23,450 or 28,000..whatever.

2. Pay whenever you can: Do not be under the impression that you have to wait for the last day to make the payment! If on the 5th of the month you have Rs. 5000 spare, PAY OFF THE CARD instead of keeping it in your savings bank account till the 20th of the month (assuming that is your due date).

3. STOP USING THE CARD IMMEDIATELY:  On a card that is over-drawn if you use the card, the INTEREST DEBIT starts on the day of the usage – NOT FROM the 45 days of credit that you think that you are entitled to.

4. If the amount is not too big try to take a personal loan (cheaper) to pay off the credit card debt (costlier).

5. If you have multiple credit cards, and have other debts create an excel sheet with the following details – amount due, maximum amount you can borrow on that card/source, interest rate being levied, etc. Obviously you should repay the most expensive loans first. Also if you are entitled for more loans from a cheaper source, use that to repay the more expensive loan.

6. Take a hard look as to how you got into this financial mess – and see what changes in life style is REQUIRED IMMEDIATELY.

7. Make sure your savings bank account, fixed deposits, etc are FULLY CASHED out and the credit card due amount reduced as soon as possible. Premature breaking of a fixed deposit should also NOT BE A PROBLEM..

8. Redeem your mutual funds, borrow against your life insurance policies, borrow from employer, wife, children, parents, friends – make sure that all low hanging fruits are plucked before you worry.

9. See if you can re-negotiate the terms with your lender…normally you can!