get out of debt
Ten tips to help you get out of debt
10 strategies to reduce your debt
- Figure out how much you owe. Gather all your credit card statements
and make a list that includes the interest rates, total amounts you owe and
minimum monthly payments. List the cards by the interest rates they charge
with the highest rate first and so on.
- Keep the two cards with the lowest rates. Cut up the others. Write
to the card issuers and close the accounts. (One caveat: Check the terms of
use before you cancel. Some credit issuers charge higher interest rates on
the remaining balance due to people who close their accounts. If this is the
case on one of your cards, pay it off and then cancel.)
- If you don't have a card with an interest rate of less than 14%, get
one.
- Resolve that you will use your cards only for essentials over the next
six months. For other purchases, use cash or a debit card.
- Add up your minimum monthly payments. Credit cards often require
very low minimums. Follow them and you will be paying forever. For instance,
if you owe $1,000 on a card with a 17% interest rate, experts say it might
take you 12 years and cost you $979 (in addition to the principal) to pay
it off if you make only the minimum payments.
- Calculate how much you can pay over the minimum. Really stretch your
budget. For instance, let's suppose the minimum payments on your credit cards
total $350 a month. What could you pay if you really stretched? How about
$750? No pain, no gain.
- Apply all of your additional repayments to the card with the highest
rate. If two cards have the same rate, put the additional money on the
card with the largest balance.
- Consolidate your debt. Many credit card issuers offer introductory
rates as low as 3.9% for six months. If you're really serious about getting
out of debt in a hurry, transfer your largest, high-rate balances to a card
with an extremely low rate and pay them down aggressively.
- Pay the minimum on your lowest rate cards until you've paid off the balance
on the more expensive cards.
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Consider using your savings to get out of debt. Sure it sounds harsh. But if you put together a balance sheet, your debt would cancel out your savings anyway. If they're in the bank, you're probably earning just over 3.2% to carry debt at 18% or more. Once you've paid off the balances, you've got to be serious about staying debt-free. If you lack self-discipline, consider using a debit card. Otherwise, pay as you go -- the entire balance on each card when it comes in. to get out of debt is not that hard, just be sure to pay close attention to your debt settlement and credit card debt consolidation and you will stay debt free!
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