Let us imagine for a moment that you have $ 5000 debt on one credit card, which is charging you 17.5% per annum. Let us also imagine that you pay only the minimum due of $ 25/month on this card. Guess what? You will never pay him to leave! The interest alone on this card is $ 73/month!
This means that every month you get further and further into debt. By the time you have to pay on that $ 5000 for 10 years if you have not used the card through this period of time, you will be obliged to $ 20385! This is more than $ 15,000 in interest. If your payment tripled to $ 75, he would take you more than 20 years.
So, what are you doing? How can I get out of debt, and use the money for other needs, savings and investments? Here are some simple techniques that can be used without having to turn to expensive financial consultant.
Council № 1: Cut Up your card
Very best way to reduce your credit card debt is to stop using your credit card! There is no need to have more than one card, so choose one with a low interest rate and reduce other activities. One you keep should be considered "emergency card." This is really emergencies, rather than just inconvenience. For example, buying a new television set will not be an emergency, but renting a car in order to get to the bedside of the death of a loved one, it would be. You can carry your emergency card with you, but do not make it too easy to use. One good suggestion to cover maps and tape paper and write on it: Only in case of emergencies.
Council № 2: Move Your Debt
If you have more than one credit card payment, you may want to consider deferring debt from the map with more APR for one year from the bottom. This will reduce the amount of money you spend on interest and you will receive from the debt faster.
Council № 3: Use the principle snowball
List all your credit card debts, and the amount you pay each month. Payback project lowest amount in the first place. Then use this money to start the second lowest amount of repayment. And then the next and the next. Let's look at an example.
If you have $ 7000, $ 5000 and $ 2000 - map in the payment of $ 150, $ 125 and $ 100, you pay $ 2000 to finish the first card. Once it is paid off, you that $ 100 and put it to $ 5000 credit cards. This means that you are now paying $ 225/month. You have increased their payments, which pays off that credit card before, and you will pay much less interest. Once that is paid, you applied $ 225 to $ 7000 maps, which makes your monthly payment is $ 375. This will significantly accelerate the payment of this card, reducing your interest payments even more. When everything is paid, you now have an additional $ 375/month to put on savings or investments!
Council № 4: Priorities for debt repayment
One of the best ways to repay your debt is to get rid of high interest first payment. Looking back at the snowball, for example, you took the low paid and it is in the first place. However, if the card was $ 2000 a low interest rate, you would want to pay off high-rate card first. This will save you a lot more interest payments.
If mathematics is too difficult here, do not despair. There are many places on the Internet, where you can find a good debt reduction calculators. Then just a matter of punching in your numbers and reading the report.
Council № 5: Consider Consolidation
If you own a home, you may want to consider consolidating debt using your home equity loan. As the home loan secured loan (they can take your house if you do not pay) you have a much lower interest rates than you do on your credit card. Paying lower interest rates are always good! Not only that, but you pay interest at home loan is taxable. This does not apply to credit cards.
Following these tips, anyone can take control and completely eliminate credit card debt.