SYNOPSIS:
According to a recent Better Homes & Gardens article,
44 million households, 57 percent of credit card users,
“carry card balances that average $8,025 month
to month. At an average annual interest rate of 17.1
percent, that generates interest payments of about
$114 a month for each household.” There are
several useful ways to dig your way out of debt.
Most Americans experience credit card debt at some
point in their lifetimes. Many Americans never get
rid of the nagging burden of high interest payments.
If you are considering buying a house or another big-ticket
item, it is especially important to get rid of credit
card debt. A Better Homes & Gardens article shares
six effective ways to take control of your finances.
Make a plan. Examine your different sources of debt
and create a repayment plan. Pay off the worst first.
For instance, if you have an account that charges
you 19 percent interest and another that charges 12
percent, pay off the higher-interest account first.
Call creditors. Telling your creditors that you are
interested in setting up a repayment plan shows that
you are taking responsibility for your debt. At the
same time, do not be afraid to bargain for a better
deal. Credit card companies will often lower interest
rates or even freeze interest on outstanding balances
in exchange for automatic monthly payments.
Watch your dollars and cents. Being in debt means
that you spent money to get there in the first place,
which was the easy part. Cutting non-essential spending
and following your money is the hard part. Be disciplined
in making detailed notations of every expenditure
so you can determine what you can cut or where you
can save money. Reconsidering cable packages or cell
phone plans, using coupons and packing your lunch
instead of buying it are easy ways to save a few dollars
every week.
Budget, budget, budget. Make a budget and stick to
it! Don’t make a budget that is impossible to
live with because you could set yourself up for failure,
which is bound to be discouraging. Instead, make lifestyle
changes you can handle and make an effort to be vigilant
about everything you spend. Another good first step
is cutting up your credit cards and making an effort
to only use cash or checks.
Know your credit rating. Knowing what your credit
report says is invaluable. Lenders use the data from
your report to determine if you are creditworthy.
Although you cannot erase the flaws in your report,
you can check the report carefully to make sure everything
is as it should be. You have the right to correct
any mistakes that appear on your credit report. Contact
a reporting bureau such as Equifax, Experian or Trans
Union to check the accuracy of your credit history.
Ask for help when needed. Most US cities
have debt-counseling agencies that will help you with
a debt-reduction plan and negotiate a repayment schedule
with lenders. These services often collect a percentage
of the repayment from the lender and will charge you
little or nothing in fees. The National Foundation
for Credit Counseling, a network of almost 1500 “neighborhood
financial care centers,” is another source of
assistance, as is the internet-based agency Myvesta.org,
which offers low-cost credit counseling. However,
it is important to avoid quick-fix services that offer
to “repair” your credit. Very few actually
offer help and many can be costly scams.
