Debt elimination does not have to entail monthly service fees, which is what happens when you hire a debt relief company to manage your bills. There's no mystery method for getting rid of debt. Debt elimination requires modifying spending and creating a realistic plan. Stick with your chosen strategy, and you will eventually pay down balances.
Review Debt Obligations
How much do you pay in minimum payments each month? What's your interest rate on these credit cards? Facing balances is one of the first steps to eliminating the debt. It helps to put everything in writing. Create a list or spreadsheet with your creditors in one column, and the amounts you owe and interest rates in another column.
How Much Do You Spend?
Next, evaluate where you money goes every month. Some expenses such as housing, transportation, utilities and insurance are unavoidable. But you can control how much you spend dining out or for other forms of recreation. Simply cutting back and spending less money on frivolous things can provide extra cash to eliminate your debt. Check your receipts and credit card statements and write down every extra expense. Add up the total spent, and resolve to spend less the next month. Use the savings to make higher payments and pay down balances. Keep this up until debt disappears.
Reduce Interest Rate
A simple move that can help your debt elimination efforts is requesting a lower interest rate on your credit cards. Paying credit card bills each month can become discouraging if payments do not reduce the principal balance significantly. The interest rate on credit cards determines how much of your payment goes to reducing the balance. Interest is charged each month on credit cards, and minimum payments are first applied to the interest charges, and then the principal. Get a lower, better interest rate, and creditors will apply more money to the principal.
Maintain Good Credit
A good credit history with your creditors increases your bargaining power, says Bankrate.com. Creditors are more open to discussing an interest rate reduction if you pay your bills on time. And if you can't acquire a reduction with your present creditor, a good credit score opens the door to balance transfer offers or home equity loans, through which you can consolidate your debts at a lower interest rate and ultimately pay them off sooner.
0 comments:
Post a Comment