Foreclosure, bankruptcy, job loss, cut backs; if these words have been in your mind lately the rest of this article will be a useful read.  Times can be stressful right now and learning how to manage your money is very important.  It is equally important, not only for you to learn, but to teach to others and your children, if you have them.  As I watch future generations grow up, I see more and more of a lack of financial knowledge, which will lead to more hardship and tough times.

©graur razvan ionut - freedigitalphotos

©graur razvan ionut – freedigitalphotos

One of the biggest problems is credit card debt, which starts very early for many of us.  18 year olds are getting preyed upon as soon as they walk through the college doors.  There are credit card reps there to greet you with a form to fill out and a free t-shirt.  This can lead to years of misusing credit cards, without knowing the first thing about credit, penalties, or interest rates.  With the interest, additional security fees, and late charges, credit cards can eat up any extra income you might make.  When using a credit card most people end up paying double or even triple what the product is worth.

Start right now to make a commitment to paying off your credit card debt.  Take the few tips I give you below and put them into action.  Before you know it you will be out of debt and you will have a huge weight lifted off your shoulders.

1.    STOP CHARGING!  Take your credit cards and cut them up, shred them, burn the numbers off of them.  If you are going to actually pay off your debt, you have to make a conscious decision not to use those cards, at all, for any reason what so ever.  It will be really hard to dig yourself out of the debt, if you continue to make purchases on your card. Lots of little purchases, or small meals can add up to $100’s by the end of the month.

2.    REDUCE YOUR INTEREST RATES!  Look at your card statement, somewhere, buried in all the legal wording, it will say APR- this is the number that is keeping your debt around.  The higher the number is, the more you’re paying every month.  Call your credit card companies and argue with them, tell them you need a lower interest rate.  If you have been paying them on time, they should give you one.  If you have had some late payments, they will tell you that you’re not approved for a lower interest rate.  If this happens, come back at them, tell them that your only option may to be filing a chapter 7 bankruptcy if they are not able to help. This can sometimes work, because they know if you file bankruptcy they won’t be getting paid at all.

3.    APPLY FOR LOWER INTEREST CARDS!  Don’t get excited these aren’t cards you can use; they are to transfer the debt from your higher cards onto.  Sometimes a credit card will give you a no APR rate for a LIMITED time when you open a new card.  Make this opportunity work for you and use it, just make sure to read the fine print and figure out when the money needs to be paid back by, otherwise you’ll find yourself in another bad debt/credit situation.

4.    PAY OFF YOUR HIGHEST RATE CARDS FIRST!  Some people want to pay their smallest cards first, but you really need to check out the APR rate on all the cards and see which one is the highest, pay that one first.  Make double or triple payments on that card, so you make a dent in it. In most cases, you should pay all your extra money on the highest APR card, rather than dividing your extra money between all of them. I am sure there is an optimal formula for paying off credit card debt, but I always try to make double payments on everything and then apply as much extra as possible towards the highest APR.

5.    COMBINE YOUR CREDIT CARD DEBTS!  Balance transfer is something to look into, if you have an existing card with coverage on it, sometimes the credit company will give you an APR break if you transfer another balance over to them.  So call the companies and ask them what they can do if you make a transfer to them.  They are banking on the chance that you won’t pay your balance off on time and they can make money from this extra debt; prove them wrong and pay it all off before they raise the rates.

After all the debt is paid, it can be easy to keep one “emergency” credit card, but this is not a great idea, because it can be to tempting for some.  First it will be a ten-dollar charge, then 100, then 1000, before you know it you’ll be back, swimming in your pool of debt.  So once you do get out of debt, try as hard as you can to stay out of it.  Also educate others on what you have learned.  Debt is not something to be embarrassed about; you can save someone from going through the same stresses as you.

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