Debt is a major hassle, and accumulating thousands of dollars of credit card debt can lower your FICO credit score, and reduce your buying power when purchasing a home or car. Fortunately, tips and tools are available to help you reduce your debt burden. A solid plan to tackle your debt can help you recover faster and put more cash in your pocket.
Preparing a Monthly Budget
Debt recovery requires a budget, or a way to track how much you spend each month. Preparing a budget isn't complicated. Simply write out your monthly expenses and subtract this number from your monthly earnings. Bear in mind, expenses for your budget ought to include only the essential recurring expenses such as rent/mortgage, your auto loan, fuel costs, debt payments and utilities. Cut extras, such as hair appointments, entertainment and shopping, from the budget. A budget helps you assess how much you have in disposable income each month.
Use Extra Income Wisely
Having an extra $500 a month after paying your bills doesn't give you permission to blow it on restaurant food and shopping. Get smart. Use this money to get out of debt faster. Think about this -- if you owe $2,000 on a credit card, you can get rid of the debt in four months.
Interest Rate on Credit Cards
Take charge of your credit card debt and get creditors to lower your interest rate. There are huge benefits in paying less interest. This reduces your minimum payment on the card, and when you make a payment, more of the money goes to your principal. Several techniques can help you persuade a creditor to reduce your rate. You can call up your creditors and simply ask for a rate reduction, or you can get a new card, with a better rate, and transfer the balance.
Home Equity Loan
There are clear benefits to using your home's equity to quickly recover from debt. Once approved, with funds in hand, one check can quickly wipe out your high interest credit card debt. The downside is that home equity loans use your property as collateral, and if you can't repay a home equity loan, you lose your house to the lender. On a more positive note, interest rates are typically lower on home equity loans. This creates lower, affordable monthly payments.
0 comments:
Post a Comment