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| English: First 4 digits of a credit card (Photo credit: Wikipedia) |
1) Figure out exactly how much your debt costs. To do this, you'll need to gather all the information you have about your debt and monthly finances, including your the total debt, interest rates, payments, living expenses, bills, and income, in one place, such as an Excel spreadsheet or other data management program. One of the easiest ways to get information about your debts is to check your credit report, which lists your complete credit history, including outstanding debts and those that have been paid. (Everyone is to a free annual credit report from the three major credit reporting bureaus -- TransUnion, Experian, and Equifax.) When you review your report, make sure you check for inaccuracies and false information since incorrect information could be hurting your credit score. Once you've determined how much money you're earning in ratio to how much your spending, you can determine a monthly debt payment that fits within your budget.
2) Understand how your credit cards work. To effectively reduce and eventually pay off all your credit card debts, you need to understand how the little pieces of plastic work. This means analyzing the terms of your card, including the annual percentage rate (also known as APR) and late fees, and your monthly billing statement. Once you have a grasp on how your card works and you can call your creditor and ask if they are willing to negotiate your rate. If the company values your business, it will likely try to work with you to establish a rate. If not, take your business to another company that will.
3) Prioritize your bills. Once you understand how your credit cards work, and you've examined your other debts, determine which ones you need to pay off first, such as those with high interest rates. By paying off these debts you will increase you credit score, which in turn will give you more leverage to negotiate the rates on other cards.
4) Create a budget. Determine how much money you need for your monthly living expenses and bills, and then track all your expenses to figure out exactly how much you're spending. Make sure to account for each and every transaction so you can get an accurate picture of your spending habits. Often, just seeing how much money you're spending each month can help you figure out where you can save money that can be put towards your debt. For instance, say you get a weekly manicure that costs $30. If you opted to go every other week or do you own nails, you could save up to $120 per month that can be put towards your debts.
5) Pay your bills on time. If you've been making your payments late, getting back on schedule is one of the most important parts of your debt management plan since numerous late payments can lead to a negative mark on your credit report. You should also always try to pay more than the minimum amount due -- otherwise the majority of your payments will likely going towards the interest that's collecting on the debt.
About Zantrio.com
Zantrio was founded in November 2007. Our aim is to inform and educate the world about trading, investing, and personal finance. Whether you're an active day trader, a casual investor, or a college student looking to learn the basics of personal finance, Zantrio was built for you!
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