There are different kinds of debt, not all of which disrupt your financial future. Many people have a mortgage, and assuming you didn’t buy an over-inflated home prior to the housing crisis, you should be okay with a monthly payment for your home. Same goes for a car, which generally depreciates slower than the payments, meaning that once your car is paid off, you can sell it and still get a return on your investment. You are using your home and car every day, so paying them off over time can be a reasonable thing to do. When it comes to credit card, or consumer, debt, however, you want to make it your priority to erase debt as quickly as possible.
Paying down your credit cards takes time and persistence. Start with a clear plan of attack. Figure out how much you owe and how much interest you are paying each month. Every credit card statement now has a 36-month payoff amount noted on it (this recently was mandated by law). This means you can get on a three-year plan, but you have to be smarter than the credit card companies. They don’t really want you to get out of debt and the law left a glaring loophole, which is that every month a new payoff amount is listed. In other words, if you don’t make a note of the amount the first time you pay, the next month you will get a new number that is still 36-months away from being paid. You could always be in debt with this scheme. This is why you want to keep some kind of record of your payments so that they are consistent. These things can be best taken care of by debt negotiators so getting one is beneficial.
Once you get your balances down to half your credit line, you may be able to apply for lines of credit that have a lower APR. Most credit card companies will allow you to transfer your balance for about three percent. Just make sure that this surcharge makes sense. You may be able to go back to your original credit card issuer and negotiate the preferred rate now that you owe less.
- Start Eliminating Credit Card Debt (debt-consolidation-2u.com)
- Is transforming debt into wealth easy? (2011tax.org)