Considering that most families are overspending during the holiday season, Christmas and holiday spending are cruel to any family budget. It is estimated that the average credit card debt of American families exceeds $8,000. After all the fun and holidays, you should control your family budget and expenses. Unfortunately, one of the biggest but most controllable expenses for most individuals or families is their revolving debt. Payments may not only limit your spending power, but also limit your financial choices for buying a car or home. In order to get rid of the trap of credit card debt, you need to determine the best way to repay and eliminate debt. The following is a list of recommendations on how to repay debt and improve your financial situation.
• Collect your information - Collect your last payroll and all the latest credit card statements. Write down the credit card name, balance, interest rate, maturity date and minimum payment amount for each card. Then add up all the minimum payments for each account. Based on your disposable payments for mortgages, utilities and other necessities; do you have enough money each month to pay the minimum credit card amount? Also, write down the interest you pay each month and year. This is a waste of money.
• Make a plan - Once you have a basic budget that includes your income and debt, you can decide whether you want to consolidate your debt, start by reducing your debt by first paying the highest interest rate card, or paying off the minimum balance first. Card. Choose a plan that you can stick to, no one knows your finances better than you.
• Consolidate your debt - Turn your revolving debt into a term loan. If you close your credit card after the merger, you will no longer be able to increase your debt. In addition, partial payments will reduce your debt principal balance, rather than the minimum credit card payment that usually only pays interest on outstanding balances. Therefore, you will repay your debt and the consolidated loan should be repaid within a certain number of years. If you have financial ability, then paying more than the minimum amount will benefit you and reduce your debt principal balance faster. If you decide to consolidate your credit card debt, take the time to thoroughly compare your options and purchase interest rates below your credit card rate. Also, set up automatic payment arrangements for your consolidated loans. This will prevent you from falling behind in payments and may face penalties and/or higher interest rates.
• Debt liquidation - this is an alternative to bankruptcy. When you look at your financial situation, if you find that your monthly payments exceed your financial ability, you will need to look for other options, such as working with a financial institution to consolidate your credit, discuss your options with a bankruptcy lawyer, or directly Contact the credit card company to reduce the principal balance of the debt.
• Stop charging - Once you plan to repay your debt, you will need to commit to stop charging your credit card and create new debt until your finances are controlled. Your plan will not work unless you reduce your expenses.
Controlling your financial situation can create short-term difficulties and limit your ability to purchase items in the next few years, such as new cars, new homes or vacations. Still, you have to control your spending so you can improve your finances and get out of debt. Once your debt is repaid, your disposable income will increase dramatically. In addition, you should have a higher credit score and a lower debt-to-income ratio; therefore, in the future, you should be eligible for a preferential rate for car and home loans.
Orignal From: How to quickly pay off credit card debt
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