Tips To Regulate And Dig Out Of Debt
Saturday, April 20, 2013, 1:00 AM | Leave Comment
The biggest unsecured debt that Americans carry under their belt comes from credit card. And the reason is that most folks make only the minimum payment or just over it. Over a few years, that kind of debt balloons to mostly unregulated stratosphere. Instead you must act like FTC, SEC, and other government agencies to regulate your own spending and saving.
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Regulate Debt
In order to determine whether you can afford the credit card balance, you must make a budget and review it every month.
Pay all your other bills first and save something for retirement, then pay your credit card balance as much as you can.
If you end up carrying balance from month to month, then it’s time to sit down and read the fine prints of your credit card agreement.
Make sure you are using the right kind of card by figuring out what the APR (Annual Percentage Rate) is. Also, check to see whether you are on a promotional rate that is going to end in six months.
Your credit card agreement will outline whether your APR is variable or fixed, and what factors will cause it to change.
Be consistent in your payments. Missing monthly payments or exceeding your credit limit may lead your credit card issuer to boost your APR and levy late fees.
Also, make sure you have a card that fits your particular needs. The reason is some cards also charge fees for balance transfers, cash advances, foreign transactions, and even inquiring about your credit limit.
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Dig Out Of Debt
For any reason, we all know if we just barely make the minimum payment or just over it, the carry-over balance will gradually become unbearable and if someone continued on that path, a time will come that even the minimum payment will be almost impossible to meet.
However, before that happens, you need to take immediate steps to tackle the debt. So how do you do that? Well, your first priority should be your retirement, even if you have credit card debt. You don’t wanna fall in a financial gutter and die there when you retire, do you? Of course not.
Next, look to pay off your credit card debt. After your monthly bills are paid, devote as much as possible to paying off your debt. One caution about retirement: If you have a very high interest rate on your credit card – 25% or more – you may want to get a lower rate card or pay that debt off before you save for retirement.
However, if you pay 9% or less in interest on your credit card, then it should make sense to first fully satisfy your retirement fund and fill it to the brim or as much as you can.
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How best to use your credit card
I have said that many times before. Used wisely, credit cards can help you out when shopping and give you peace of mind that your purchases are protected.
Taking care to stay on top of your credit card use can help you get the best of the cards convenience while avoiding all its drawbacks. And that’s the main thrust and the core of how best to use your credit card.
Use it for your own livelihood instead of filling up the credit card company’s treasure chest.
Regulate Debt
In a Nutshell
Don’t be ashamed of your debt but don’t be proud of it either. Keep a balance.
Good debt that you can afford to pay back is your livelihood.
Bad debt that you cannot afford to pay back – for whatever reason – will eat you alive. Feel free to be ashamed of bad debt.
To free up cash that you can devote to your debt, review your monthly budget and see if there are areas you can trim.
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