HOW TO RID YOURSELF OF DEBT!
The one we always hear... WHOA on the CREDIT CARDS! I have heard the adage from every direction that if you want to get out of a hole... STOP DIGGING!
STOP DIGGING TIPS!
Carry Cash - give yourself a weekly cash allowance and you'll be more aware of how much you spend. Plus once you run out of money, you're more inclined to stop spending! It's very easy to overspend when you just run a card through a machine!
When only plastic will do.... Use a debit card, instead of a credit card.
LEAVE YOUR CREDIT CARDS AT HOME! One of the easiest ways to stop charging is to not carry the cards with you.
How many cards to you have? Keep a few credit cards with a long standing positive history and close the rest! Having a few good cards will boost your score, but having too many my hurt it. (not to mention leave you tempted to use them!)
LOWER YOUR RATES
Once your spending is under control, move on to reducing your interest rates!
There are so many credit cards out there, they are forced to be competitive. Call them and negotiate your rates. Explain to them that you plan to transfer the balances to another card unless your rate is lowered. Usually card holders with good credit can lower their rate, sometimes substantially!
Transfer it! Move the balance to the card with the lowest rate! Look for offers with low introductory rates, like zero interest for 6 months, etc. Do your best to pay this card off, with 100% of every payment coming right off your balance you will be making serious progress... BUT MARK YOUR CALENDAR! If you still have a balance when the 6 months is up, move it again to the lowest rate possible!
REDUCE your Debt!!
Start getting rid of that debt! Develop a strategy and make it happen!
Break it down - Make a list of each credit card you have, it's balance, minimum payment and interest rate.
I've read lots of strategies on which debt to pay first! It makes sense to me to pay the minimum on all your cards and put your "determination to make larger payments" on the card that has the highest interest rate!
Another strategy that I've heard is to divide the minimum payment by the outstanding balance on all your cards and pay the highest number first. Then move on to the next highest number
Example:
Account Balance Min. Payment How many payments remaining?
Balance divided minimum payment
Sears - 1,200 38.00 31
Visa - 700 60.00 12
Discover- 4,000 100.00 40
In this case you would pay the "extra money" to the visa account until that one is gone, then move on to the Sears account. Once you have the Visa card paid off, add that payment to the Sears card and so on!
Once you start seeing the progress, it becomes addictive to see more progress!
Repeat this process until you are DEBT FREE!
Then you can start thinking further ahead! Start thinking about investing and planning!
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