Debt Management: Credit Card Tips
I spend a lot of time reiterating the dangers and temptations that come with carrying credit cards. Below are some tips that can keep even the most reckless debtor out of trouble.
Don’t use a credit card to pay for things that are quickly consumed.
Learn to associate things such as meals and vacations with cash on hand. There’s no faster way to fall into debt than to rely upon your cards to stay afloat in daily life when you cannot pay the balance off in its entirety when the statement arrives.
Don’t fall into the minimum payment game.
Just paying the minimum due on bills barely covers the interest owed. Of course this formula also means nothing is being paid on the principal. It will take years to pay off a balance in this situation, and potentially cost thousands of dollars in addition to the original amount charged.
Understand that Some Debt Doesn’t Have to Be Paid Off Quickly.
Don’t pour all of your bill-paying cash into chunking down your mortgage if you have other debt due. Remember that mortgages tend to have lower interest rates than other debt (especially credit card debt) and the government allows you to deduct the interest you pay on a mortgage. The interest on the rest of your debts is not a deduction.
Pay High Interest First.
In keeping in the themes of the last tip, always focus your efforts on the loans with the highest interest rates first. The key to managing your debt is first to pay down the balances of loans that charge the most interest while remembering to pay at least the minimum due on all of your other balances. Once the highest interest debt is paid down, move on to the next highest and pay the minimum on all the rest. Repeat this process until you’ve knocked them down to zero.
October 7th, 2007 at 9:41 pm
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October 8th, 2007 at 11:14 am
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