Posted on Tuesday, 17th August 2010 by Emily Smith
In Part One of this post, we laid out a strategy for how to eliminate credit card debt. In review, it basically consists of budgeting the maximum amount you can pay monthly and as your minimum payments go down you continue to pay the full amount, with anything over minimum payments being applied towards the account with the highest interest rate.
That’s a good solid strategy. It takes some commitment; when you see that you are paying more than you absolutely have to pay, it can be tempting to cut yourself a break and use the money elsewhere, which leads us to the first tip….
Advanced Techniques to Help W
ith Credit Card Debt Reduction
“Keep your eyes on the prize.” This is so basic and so obvious that it wouldn’t warrant being on the list except for one thing. Success at financial management totally depends on it. With all the other things in life that are competing for your money, it can be really difficult to pay more than the minimum on old debt. Stay the course, though. Interest rates on credit cards are, with a few exceptions, so high that the money you lose on them overshadows any returns you are likely to make on other investments, and paying that interest increases the price of anything bought on credit to an amount that you would never agree to upfront.
Pay off credit cards before saving for retirement. (Consult a financial advisor or get debt credit counseling for this one.) This approach is only beneficial for the disciplined so if you still are inconsistent with your financial plan, don’t vary from the basics; however, if you are consistently paying your full amount towards retirement and debt reduction, you can save significantly more in the long run by paying the full amount towards high-interest rate credit card debt first. To make this work you have to make up for lost time with the retirement savings when the debt is paid off, and put the full monthly debt budget into your retirement program.
Consider a credit card debt consolidation loan. Debt consolidation programs can be beneficial or worse than credit card debt, so shop around and pay close attention to the terms. There are several articles on this site specifically about that, so read as much as you can to get the full picture. Debt consolidations typically have high interest rates, but they may still be better than your credit card rates. It’s worth looking into, particularly if you have very high-interest cards or aren’t keeping up with all the minimum payments.
Similar Posts:
- The Facts of APR Credit Card
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- 4 Routes To Eliminate Debt From Your Credit Cards
- Facts on Low Interest Credit Cards
- Four Steps to Become Debt Free in 2010
Tags: Card Debt, Credit Card, Credit Card Debt, Debt
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