A great first step in improving your financial life is debt reduction. Credit card offers are so appealing these days: low introductory rates, reward points, high limits. Many consumers rely on them to get through hard times and are left with large amounts of debt and high interest rates. Here are a few strategies to help you begin the process of reducing debt.
Make a List
This step seems intuitive, but many people look at their debt separately. List ALL of your debt including your mortgage, cars, student loans, and credit cards. Note the amount of debt for each, interest associated with them, and minimum monthly payments.
It is important to stop using your credit cards. Put off what you can; now is not the time to take an expensive trip or buy a new TV. Understand the difference between a want and need. Once you have paid off your debt and started the saving process, you can then indulge a little.
Pay at least the minimum monthly payment on each of your cards. Once your minimum payment is reduced, continue to pay the initial payment. Also, once you have paid off one of the cards, put that money toward another. If you come into additional income or a tax refund, put that money toward paying off your debt.
Most people probably wish they never started using credit cards to begin with, so why would you start using them again once you’ve paid off the debt? Take action to prevent being tempted to use credit cards. Literally cut-up the cards and once they are paid off, cancel them.
Resource: SaveItUp Debt Reduction Worksheet
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Categories: Credit, Debt Reduction