Got credit card debt?
Getting free of unsecured debt might take some time and patience, but since interest charges are compounding your problem, the sooner you start a reduction plan, the better.
Try these step-by-step strategies:
1) If possible, pay off all your unsecured debt with your rainy day reserve. Then replenish your savings posthaste.
2) No cash reserve? Prioritize bills representing unsecured debt. First cover food, medicine, utilities, gasoline, any child support, and taxes if you’re self-employed.
3) Liquidate your credit card loans: Organize and take stock of your unsecured credit card debt by creating an accounting form like the one below. Organize the list in descending order of interest rate. Pay off the card with the highest APR first, then proceed down the line.
Credit Card: ____________ Minimum Monthly Payment: _____
Balance: ______
Interest Rate: _____
Credit Card: ____________
Minimum Monthly Payment: _____
Balance: ______
Interest Rate: _____
Credit Card: ____________
Minimum Monthly Payment: _____
Balance: ______
Interest Rate: _____
4) Don’t be a slacker when you transfer amounts.
Always transfer the amount you’ve been paying on one card to the next in full, so that your payment will increase. In other words, the monthly amount you were paying on the card just paid off — $200—plus the minimum payment on the next card—let’s say $45—will be the new amount you now pay on the next card—a total of $245. (Don’t pay a minimum below $245 or you’ll be creating a longer payoff period again.) Continue this process until all your credit card debt is paid off.
5) Have at least one good credit card is good for your credit. So. when your unsecured debts are paid off, close all but one or two credit card accounts, and continue to pay them off each month.
6) Keep going! Redirect the monthly amount of the payment on the last credit card, including the extra $150, to your investment account or toward reducing other bad debt.
7) If you’ve followed through on 1-6 above, WHOO HOO to YOU!! You deserve a deep breath and a round of applause.
Got credit card debt?
Getting free of unsecured debt might take some time and patience, but since interest charges are compounding your problem, the sooner you start a reduction plan, the better.
Try these step-by-step strategies:
1) If possible, pay off all your unsecured debt with your rainy day reserve. Then replenish your savings posthaste.
2) No cash reserve? Prioritize bills representing unsecured debt. First cover food, medicine, utilities, gasoline, any child support, and taxes if you’re self-employed.
3) Liquidate your credit card loans: Organize and take stock of your unsecured credit card debt by creating an accounting form like the one below. Organize the list in descending order of interest rate. Pay off the card with the highest APR first, then proceed down the line.
Credit Card: ____________ Minimum Monthly Payment: _____
Balance: ______
Interest Rate: _____
Credit Card: ____________
Minimum Monthly Payment: _____
Balance: ______
Interest Rate: _____
Credit Card: ____________
Minimum Monthly Payment: _____
Balance: ______
Interest Rate: _____
4) Don’t be a slacker when you transfer amounts.
Always transfer the amount you’ve been paying on one card to the next in full, so that your payment will increase. In other words, the monthly amount you were paying on the card just paid off — $200—plus the minimum payment on the next card—let’s say $45—will be the new amount you now pay on the next card—a total of $245. (Don’t pay a minimum below $245 or you’ll be creating a longer payoff period again.) Continue this process until all your credit card debt is paid off.
5) Have at least one good credit card is good for your credit. So. when your unsecured debts are paid off, close all but one or two credit card accounts, and continue to pay them off each month.
6) Keep going! Redirect the monthly amount of the payment on the last credit card, including the extra $150, to your investment account or toward reducing other bad debt.
7) If you’ve followed through on 1-6 above, WHOO HOO to YOU!! You deserve a deep breath and a round of applause.