Here are 7 steps to getting rid of credit card debt:
1. Make a budget listing all your fixed expenses. Rent or mortgage, car insurance, car payments, cell phones, utilities, day care, fixed loans, etc. Then try to estimate a reasonable budget for discretionary items like food, drinks, dry cleaning, etc.
2. Make a list of all your outstanding balances and sort by balance, minimum payment, and interest charges if you have multiple credit card debts.
You may think the wisest thing to do is paying off the credit card with the highest interest rate. However, there are 2 preferred methods to follow.
First, you should first reduce the number of credit cards. Pay off the smallest balance first with larger payments until the number of credit cards you have in debt is down to one. Your ultimate goal is zero, or when you can pay your monthly balance in full every month.
The other strategy is to pay the balance on any card exceeding 50 percent of your credit limit because balances above this level may cause your credit score to diminish.
3. Use cash or a debit card from your checking account. You can’t spend what you don’t have.
4. Find ways to make extra income. Most likely your rent or mortgage is your biggest expense, so consider a roommate. If you like your occasional privacy, consider an International student for shorter periods of time.
Consider starting a Blog. Blogger and WordPress blog platforms are free. If it becomes popular, slap on some Ads with Google AdSense. Your first payout will be issued when you reach $100.
5. Look for the little things that add up in your expenses. Maybe change your cell phone plan if you are constantly going over the monthly minutes? How about that $2.75 Starbucks latte or cappuccino every workday? That’s almost $7,000 a year!
6. Avoid signing up for new credit cards with a 0% APR for the first 6 months.
You probably receive a lot of junk mail enticing you to sign up with a new credit card with a 0% APR for the first 6 months before it jumps to 24% or even higher. Then 6 months later you would transfer your huge balance to another piece of plastic. Unfortunately, the biggest risk is they are simply giving you more credit to spend, and the number of cards and liability increases.
Unless you are extremely disciplined, this doesn’t really work as you end up bigger and deeper in the hole! Reducing the number of credit cards is the goal.
7. Get a consolidated bank loan to pay off your debt.
Logically speaking, a 12% bank loan APR (Annual Percentage Rate) is less than 25% APR on a credit card. It sounds like good advice, because you can’t spend what you don’t have. You will be asked to have all your cards cut up (except maybe one with a small credit limit) and you have reduced the number of credit cards.
However, your bank may not accept your loan application if they have no collateral, or if your debt to service ratio is too high. Often times a co-signer is required. These types of loans are not like regular loans for a car or house where they can repossess it, if you default on your payments.
How To Save Money By Consolidating Your Debt – https://www.mastersofmoney.com/howtosavemoneybyconsolidatingyourdebt/