It’s possible to overcome debt, but you have to be diligent. Try to make a commitment to yourself to get high interest debt out of your life as soon as possible. Here is a basic 5 step plan to get your started.educ
1.Hide your credit cards. Some people suggest cutting up cards to avoid using them, but if you do that, try to keep one intact. Another one is freezing your credit cards, same effect, but no permenent destruction. The goal if this step is to get you to stop digging a deeper hole. All the other steps are invalid unless you do this one.
2.Have an emergency fund. Try to get one month’s expeneses saved. This will be a cushion to keep you from going back to credit cards if something comes up.
3. Tier Your Debt. Look at your debts and examine both interest rates and balances. Usually student loans and mortgages have the lowest rates, so just pay your regular payments. Decide if your going for psychological wins by attacking the smallest balance or if you’re looking for a financial win by attacking the one with the highest interest.
I kind of did a 50/50 with a tax refund and paid a small debt off and put the rest toward a high interest debt. It gave me peace of mind with is worth more than a few extra dollars saved.
4. Lower your interest rates. Call your credit card company or bank and see if you can get a lower rate. If possible, move them to a card with 0% transfer balance. Keep making payments on these cards as you try to get the balance as low as possible at 0%.
5. Keep jabbing and throw in a hook. My husband told me and I love the philosophy behind it. Just keep working at paying your debt month to month and once in awhile put a big chunk down to keep the momentum (like a tax refund semester refund).
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