WHAT'S NEW

BENEFITS

  • Combine your credit cards into one payment
  • One low program payment
  • Get out of debt quickly
  • Submit form for a free consultation

Consolidate Credit Card Debt On Your Own

Getting help from agencies to streamline all your debts is fine. But if you’re more of a DIY person, know that managing your debts is also possible without paying debt councilors and consolidation agencies. It’s going to take a lot more of hard work and focus so here are some things you need to know about do-it-yourself debt reduction.

1. Evaluate your debts

Collect all your financial documents and print out your credit reports to see exactly where you stand. Facing your debts and really seeing what you’re dealing with may seem scary but it’s a necessary step. Then on a piece of paper (or a spreadsheet, if it’s easier for you), write down the balances, interest rates and monthly amount due for each of your debts. This list should also include your auto loans, personal loans, payday loans, credit cards and other debts. Take note of any annual fees on your credit cards. For loans with longer terms and lower APRs, you don’t have to include them in the list yet. For now, focus on paying off your other debts, especially those with higher interest rates.

2. Look at your budget

After you have collected information about your debts, evaluate your monthly budget. Write down your monthly income after taxes and subtract rent/mortgage payment and other monthly expenses such as childcare, student loan payments, insurance, utilities and groceries. Once you have subtracted all your expenses, calculate how much you have left to pay off your debts. However, if the amount is too small, figure out a way to reduce you’re spending or increase your income. Consider turning off your cable subscription or cutting back on expensive recreational activities even if it’s just for a short time. Then work on putting more on paying your monthly debts.

3. Make a plan

Now that you’re aware of your actual financial situation, it’s time to create a plan for reducing your debts. Using your information from steps 1 and 2, subtract your minimum debt payments and monthly expenses from your monthly income after taxes. The remaining amount should be used to pay off the debt with the highest interest rate and the highest balance. Continue this cycle every month until the debt is paid off and then move on to the next highest rate/balance account. It’s important that you keep the debt with the high interest rate from getting bigger. It may seem like an odd process compared to making minimum payments for each of your debts every month but it’s actually the fastest way to reduce your debts. Also, it’s important to note that you shouldn’t be adding any new charges to your credit card. Furthermore, try to increase the amount you pay for your debts each month. The more you pay, the sooner you will be freed of your debt.

4. Start negotiations

While you are starting to act on your repayment plan from step 3, you should contact your creditors and lenders to see if there’s any way to improve the terms on your debts. Through negotiations, it’s possible to lower your interest rates or negotiate a reduced settlement on some debts. Also, you might consider moving some of your credit card debts to new accounts with lower interest rates. One way to save on interest is to move your debts to accounts with a 0% introductory rate for 6 to 12 months. Just make sure to keep each of your credit card balances below 35% of the credit limits to avoid damaging your credit score.

5. Follow-through

After all the evaluating and planning, this is the most crucial step – following through your plan. Do your best to meet your payment goals each month. But don’t be discouraged if the amount you put toward your most expensive debt varies each month. What’s important is to consistently put as much as possible toward your debts. Signing up for an automated payment system and keeping a chart of your progress on your bedside table, refrigerator or anywhere that’s easily accessible to you, can help you stay on track.

But most important, you should avoid spending beyond your budget during this time. Focus on paying your debts, not acquiring new ones.

LATEST ARTICLE

Credit card Holders protection laws

Getting your own credit card certainly has its perks but before you fill up that application form and do get one, be aware of the existing credit card laws and also be assured that the law is going to protect you. Read on and always be legally ready: Read More »

Medical Debt - Medical Bill Options

Nurturing a good credit score is important as this is where your ability to apply for credit and what kinds of terms you will be offered depends on. Paying bills late will always be seen negatively while reduced debt is seen as a positive thing. Paying your hospital bills late is never a good thing. But if you’re struggling to do that, here are a few tips that should help you to eliminate your hospital bills and get a good credit score.
Read More »