Little known
secrets for easily becoming debt free!
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If
you are behind on payments or can't manage your current payments...
Renegotiate
If you are behind on your current payments or can't manage
your current payments, you may be able to renegotiate them yourself.
Simply phone each of your cards' providers and explain your situation.
If this is uncomfortable for you, or you have a lot of cards, you may
prefer to have some one negotiate for you. In some cases they will be
able to achieve better results. The important qualification for a
negotiating company is not whether they are nonprofit or for profit, as
even a nonprofit will charge you for their services. The important
consideration is that they achieve results, or refund any money you paid
for their services. Details
on free consultation to lower your debt by 50%. Free gift for speaking with us: 10
more tips for financial recovery.
If
you are current or close to current with your payments:
General Advice
Before planning your strategy, I suggest you get together your last
statement
from all of your credit cards. Make a table showing the balance, APR,
minimum
payment and the balance divided by the minimum payment (you'll have to
calculate this number yourself) for each card. Note that paying off
cards
with high minimum payments will free up more money to pay towards other
cards, even if you end up paying off cards that doen't have high interest rates.
Be sure not to get so aggressive in paying down cards that you don't
keep enough of an emergency fund. If you should do this and the banks
ever lower your available credit (I have seen this happen to people
with excellent credit and no late payments), you could be in real
trouble.
Pay off smallest balance
first
Although way 2 (Pay off the highest interest rate card first) is more
intuitive,
this often works better. This is especially true if you ever get hit
with
over limit or late fees on the card. It means you will soon have one
less
payment to worry about each month, and that is worth something in and
of
itself.
Once that card is paid off the money you were paying towards it each
month can go towards principal pay down on the next smallest balance.
Be sure not to rack up new charges on this card unless it is for
something that will make you money or is absolutely necessary, such as
a dental emergency or keeping your car in safe working order.
Pay off the
highest interest rate first
This is the most common, most easily understood approach. Take any
extra
available money and put it towards principal pay down on the card with
the highest interest rate.
Be sure not to cut into your emergency funds to do this. Cars and
appliances
will break down. Hospital bills do happen. If you use money that should
go into your emergency fund to pay off your credit cards, you
will
just end up borrowing it back on one of your credit cards possibly at a
higher rate.
Balance
transfers
One way to really jump start your program towards being debt free (or
at
least towards having lower payments) is by using a balance transfer.
Sometimes
you will have offers at your disposal from your present credit card
banks.
Often these are only available through an offer they have mailed to you,
or an offer on their website. Before you use any of these, phone every
card provider
except the one you are trying to transfer the balance from. Ask them
what
balance transfer offers they have available to you. Be wary of any offer
with a short fuse i.e. it jumps from 0%APR to 16% after six months.
Note
that many 0% interest rate balance transfer offers still have a 3%
transaction
fee. If you can't get a good balance transfer offer from your present
cards,
search on the web for balance transfer cards. Be aware that some
balance
transfer offers take a while to actually pay off your old card- expect
to make one more payment to it.
Renegotiate your
rate
with your present card company.
Phone your credit card company. Tell them how much you like some
feature of their card, but explain that you can/are getting a better
rate from their competitors. Ask them if they can give you a better
rate. If they refuse try again in 3-4 weeks, or even sooner if you are
comfortable doing so. If they give you a good rate, you may also want to try to
get them to raise your limit so that you can shift more debt onto what
is now a low rate card.
