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Reducing your credit card debt
Wave Goodbye to Credit Card Debt
Credit card debt.... Ugly little words that can create pure chaos in your life. I feel I must begin this hub with a word of caution to help you protect yourselves as you begin your journey to becoming debt free. There are no "get out out debt quick" or "get rich quick" schemes that work. To get out of debt you must be willing to work for it and make it come true.
At one point in my life I was buried deep in debt. Very, very, very, deep in debt and I have managed to climb nearly all the way out of it. By the end of this year I will have no credit card debt and I will only have my mortgage and student loans left. It was not easy but little by little progress was made and now there really is a light at the end of the tunnel. I hope you will take my suggestions to heart and join me in the Suzy Orman back to cash movement!
What is this back to cash movement? This is a movement that Ms. Orman, the diva of the finance world, has begun. All you have to do is stop using those blasted credit cards and use cash for everything! Does that sound impossible? It's not nearly as hard as it sounds, I did it and so can you!
First, take all those credit cards (I have 3 that were all maxed out!) and put those cards away. Some people put them in the freezer, literally freezing their accounts! You don't need to go to that extreme to make this work, I just put mine in a fireproof box where I keep legal papers.
Now that my cards are put away I only use cash for anything I buy. Not into carrying loads of bills around? No problem just use that handy little debit card. Just be sure to keep track of things so you don't drain that account! If you are worried about that just give yourself a weekly allowance that you withdraw from the ATM.
This is where you are the creator of your success! Your resolve to get out of debt and your dedication to win this battle will determine the outcome. Set goals for yourself and celebrate with friends as you meet and surpass each one!
How do I motivate myself? I am determined to be out of debt before I start a family. I plan to have one credit card paid off BEFORE my wedding in May, which is definitely going to happen! The next card I want to have paid off before the end of summer, which still seems like it will happen. My third card I plan to have paid off by the end of the year.
Can this much debt be paid off so quickly?
Yes it can! Let me explain my game plan.
First, be sure you are paying the minimum payments on EVERYTHING! Not paying on things will hurt your credit score, which could be your saving grace in the battle against debt! If you haven't been paying start now to help begin the process of repairing your FICO score!
Second, do you know your FICO score? NO?!? Get yourself to a website that gives a free report! Everyone gets one FREE credit report a year, did you get yours this year? You can try freecreditreport.com or the annualcreditreport.com website. Still not sure about these sites? Read what the government has to say about the free credit report here.
So now you're paying minimum payments and you know your FICO score and have done a credit check. Now what? Now the real work begins!
The first thing I did when I began reducing my debt was visit a website Suze told her viewers about. Bankrate.com. At this site I found a credit card to transfer my highest balance to that had a promotion for no interest for 21 months! So instead of paying the 18% that I had with my old card, I am now paying no interest until NEXT YEAR! I found a second card on the site to transfer one of my smaller balances onto that has no interest for six months. So go to bankrate.com and find a card that you can do this with too.
Now two balances are interest free so pay just the minimum on those cards. The other card is what you want to focus on and pay down. Any extra money you have goes towards paying off that card. Once you pay that card off you add the amount that you paid on that card each month to the minimum payment of the card with the promotion that will expire first.
In other words, if you were paying $100 a month on the card that you just paid off and $25 on the next card, your new payment will be $125 on that card. Continue paying the minimum on the third card until you pay the second card off. Once card 2 is paid off add the monthly payment from that card to the final card's minimum payment and continue until it is paid off completely.
Remember to not cancel your cards after you pay them off! Having available balances of credit actually HELPS your credit score! Having unused credit shows creditors you are responsible and reliable in paying back debt!
Want more information on becoming debt free? Here's how!
1) Find Suze Orman's podcasts on itunes! It's free and worth spending some time watching!
2) Join Suze's online community!
3) Check out the YouTube video below!
4) Take a look at the books I've included at the end of this hub
Remember, not acknowledging your debt will not help the problem and make your life easier. Face your financial demons, pay down that debt, and live the life you were meant to live!
I adore Suze!
This was the first book I ever read on finance. Highly recommend it, especially if you are like I was and don't know where to start!