Chart courtesy call New York Times
First step: to end the use of cards.
Plain and simple. Credit card only in emergencies. If you wish, you can pay back your debt, you should not continue every month. If you have any charges on your credit card, go to your debit card.
Step two: to understand all of your debts.
It is not only a credit card. Many people make the mistake in the list only their credit card debts, and ignore things like car loans and student loans. You must be from all his debts and listing the following information for each: the total amount due, the minimum rate of payment, payment is usually (if you pay more than the minimum, at least a portion of the total debt.)
Third step: a plan
The list of the largest debt at lower interest rates. Add the payments you made any every month. Now look at the total of your payments: The minimum payment on all issues, but the debt with the highest interest rates - the application of payments on debt interest.
$ 17,643 to 11.95% stake, 380 U.S. dollars minimum payment, usually paid 750 U.S. dollars
$ 12,545 to 7.89% interest, the minimum payment is 303.36 U.S. dollars, the type of payment is $ 400
$ 63,135 to 2.99% interest, the payment is 329.83 U.S. dollars, the type of payment is $ 350
The borrower will pay 1,500 U.S. dollars per month for the repayment of debt issued. To apply the principle discussed above, new payments are:
Fee: 866.81 U.S. dollars, car fee: 303.36 U.S. dollars, the payment of student loans: $ 329.83.
In this case, the credit card will be repaid in June 2010 (the feeling, right?) Instead of October 2010.
Once the card is paid, the new reimbursement scheme in:
Auto fee: 1170.17 U.S. dollars ($ 866.81 + $ 303.36),
The payment of student loans: $ 329.83.
This is where the magic happens: the car is now paid only 6 months instead of 2 years old, had left to credit. Once the car is paid off student loans will pay $ 1500. This makes the student loan can further 3 years. He works mostly 20-year-old student loan 6 years of the loan.
And the example above could save more than 10,000 dollars in interest payments alone.
Step Four: Stick it!
The most difficult part of this process is to participate in the plan. An example here is 6 years old, debt repayment plan. It is easy to fall under 6 years old, but there remains much to do with debt in 6 years that the original 20 years, he would.
Of course you can always make additional payments and repay the debt even faster. If you want to make additional payments, always the highest interest rate first.
Step five: The understanding of the profits.
What you need to remember is the amount you pay each month for the repayment of debt issued. If you pay 1500 U.S. dollars debt every month, if everything is paid, you will be 1500 U.S. dollars per month for themselves! Imagine 1500 U.S. dollars per month to your destination. If you want to buy a house and needed 20,000 U.S. dollars for the deposit can be saved per year!
Keep your eyes on the prize is a way to the right path remain, with a debt. And the price is that you pay if the debt eliminated.