|
 When
people find themselves with mounting credit card debt, there are many
guidelines that can help them manage that debt and pull themselves back into
the black.
The first tip, and one that is probably the smallest first step
towards paying off debt, is to put a stop to all credit card use. One has
to first stop incurring new debt before being able to take a bite out of
current debt.
A second step is to keep no more than two credit cards
active. Using multiple credit cards makes it much more difficult to gauge
how much is being spent, and much easier to make impulsive purchases.
Remember, a lot of little debt can amount to a pretty hefty sum.
Third, set
a realistic goal for paying off debt. Once it is determined how much is
owed, a plan should be created that decreases debt over time. A possible
plan would be to set a percentage of earnings aside each month specifically
for debt repayment. Planning where to allocate earnings each month
decreases impulse buying .
A fourth option is to consolidate debt, either
placing debt from multiple credit cards onto one lower interest card, or
finding another loan vehicle with a lower rate such as a home equity loan,
where debt can be transferred. This step is helpful in many ways. It allows
a deeper understanding of one’s debt by having it all in one place, and it
typically saves a lot in interest payments. Consolidating loans, however,
makes it much easier to take out new credit cards and incur further debt,
which completely defeats the purpose of consolidation. There are banks,
financial planners, and very informative books that can help guide one
through this very important financial phase. |
