Just like creating a budget, the key to paying off any debt is to make a plan, and stick to it! Here are some helpful hints to get started on your own credit card debt management plan.
1) Start by creating a list of every outstanding debt, and include details like the amount owed, interest rate, payment due date, and so forth. If you don’t know this information off the top of your head, log onto each account and view your statements to find specific interest rates and balances. By creating this list, you are acknowledging each debt and seeing everything in one spot should help keep you organized.
2) Once you have your list, think about targeting one debt at a time. Specifically, target the debt that has the highest interest rate, and concentrate on paying that debt off first. After that, you may choose to pay off the card with the smallest balance next.
3) Remember to pay more than the minimum when it comes time to make your payment. This is a crucial step in all debt management strategies, and is often the most ignored. While it may seem nice having a small minimum payment due each month, you’re only costing yourself more money in interest! If you make several payments throughout the month, that can help keep your interest accumulation at bay.
4) Another popular idea is to consider debt consolidation. Sometimes transferring balances to a different credit card that has 0% APR for the first year can be an effective strategy, but you want to make sure that you pay off that balance transfer within the year. However, be careful to read the fine print because there are often transfer fees hidden in the fine print. Make sure the savings from switching to the lower rate are greater than the transfer fee itself.
5) Continue to follow a budget to make sure you’re allowing enough money to go towards the debt payments, budget the discretionary expenses, and save optimally each month. Paying down debt shouldn’t mean that you’re now neglecting to put money into savings, it means that you should strive for a happy balance between the two. Pay yourself first, (and your creditors), while watching your spending on those purchases that aren’t necessary. If cutting out two meals at a restaurant each month can save you $40, those savings could essentially go towards paying off the credit card debt. Yes, we know it’s summer and tacos and margs are just calling your name! But cutting back on the dining out budget is a great way to save money!
6) Once the debt is paid off, don’t charge another penny until you have the financial control to pay off the balance each month. That is the key to "credit card" happiness.
If you find yourself still needing that extra nudge to get started on your own debt management plan, don't hesitate to make an appointment with us today and we can discuss your options!
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