Free Yourself from the Four-Letter Word: Debt
It’s hard to be wise when you’ve got the urge to buy, and “charging it” is the quick and painless solution. For some it’s impulse. For others it’s habit. And most of us are guilty of abusing the plastic when we see things we just can’t live without. The problem is if you don’t have the cash to actually pay for what you want, then it might be a purchase that will haunt you for years.
Debt is the norm in America; in fact Americans are carrying upwards of $638 billion in revolving credit card debt. But you don’t have to be part of the average. Free yourself from the bad kind of debt (read more about that below), and buck the norm!
Find out what you owe: The first step is to find out exactly what you owe. Gather all of your bills and put them in a pile from largest to smallest. Make a list of all the balances and interest rates so you know exactly where you stand.
Stop charging: Don’t charge anything to your current debt. The longer you continue to pile up the debt the harder it will be to pay it off.
Attack the debt: Increasing payments and reducing interest rates are the two most significant tools in repaying debt. Increasing your payments will reduce the length of time and cost of paying your creditors. Reducing interest rates will also help you pay off your debt faster and save money. You can try requesting better rates from your current creditors and/or seek a low interest balance transfer offer from one of your current creditors and transfer the high interest balances to that card, reducing interest and consolidating payments.
Control spending urges: Once you have paid off that credit card put it away. If you continue to leave the card in your wallet then all you’re doing is tempting yourself to charge again. Leave the card at home and shop with cash or a debit card. If you can’t control your credit card usage, then consider closing the accounts.
Get a copy of your credit report and score: Look over your credit and payment history carefully. This will help you face the truth and see what behaviors you need to change. Also make sure everything is correct, if not contact those creditors to discuss. Click here to find out more about obtaining a credit report.
Set a budget: The best way to track what you are spending and find out where you can cut back and save is to create a budget. Check out how to create a budget here.
Home equity: If you own a home be careful about using that equity to pay off credit card debt. Converting a high-interest credit card debt to low-interest secured debt is a tool to consider but be careful. Make sure you can handle the payments because defaulting on a loan secured by your home can have some serious consequences.
Keep in mind that not all debt is bad debt. Mortgage loans for a home or student loans for your education are an investment in your future. Keep your debt in control and stay committed to paying it off and you can be debt-free in no time.