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Erasing Your Debt

Posted by Heartland Properties on Wednesday, April 13th, 2022 at 5:06pm.

Millions of Americans set a goal and succeed in paying off their credit card debt each year! Is this one of your goals? With determination and a plan, you can take control of your credit, improve your credit score and start building a savings account in the process. Here’s how:

The first step toward reducing your credit card debt is to stop adding to it. While you don’t have to literally shred your cards, you do need to stop using them routinely.  Try one (or all) of the tips below to break this habit:

Carry Cash
Give yourself a weekly cash allowance for expenditures. You’ll be more aware of how much you actually spend; plus, once you run out of money, you’re more apt to stop spending.

Out of Sight, Out of Mind
Keep your credit cards at home and you’ll be less likely to use them.

Think Strategically 
Decide on two to four credit cards with which you have a lengthy, positive history, and close any other accounts. Having a few good accounts will boost your credit score, but having too many will hurt it (and may also keep you tempted to spend money you don’t have.)

Once you’ve got your spending under control, focus on reducing your interest rates.

Negotiate Rates 
Call you credit card issuers and ask for a better rate. Usually, borrowers with good credit scores can cut their rates by a few points – sometimes as much as 10%.

Transfer Balances 
Consider transferring balances from cards with high interest rates to a different card. Look for offers with low introductory rates that are good for at least a full year, with relatively low rates thereafter. Read the fine print, and pass up offers from cards with hidden fees or costs.

Shop Around 
Do a little investigative work to find the best card offers. Research online to locate current offers.

Now it’s time to start chipping away at those balances. Develop a strategy and make it happen using the following tips:

Develop A Plan
Make a list of each credit card you have, its existing balance, minimum payment, and interest rate.  Pay as much money as you can on your card with the highest interest rate, while paying the minimum on the other cards. This additional payment on the high-rate card will help you pay off the principal faster.

Build A Debt Snowball
Once your highest interest rate card is paid off, take the same amount you’ve been paying on that card and add it to the minimum payment on the card with the next highest interest rate (This is commonly referred to as “snowballing” or a debt-reduction rollover of your payments). Continue to pay the minimum on the remaining accounts, repeating the process until you’re debt-free.

Now that you’re debt-free, start thinking even further ahead:

Begin to invest the same amount of money you’ve been applying to debt every month. You’ve trained yourself to live on less by paying as much as possible toward your debt each month, now take that philosophy and use it to your advantage, reinforcing that thrift must continue in order to develop a mindset of abundance.

Spend a few moments each day imagining what it will feel like to be debt-free, paying cash for every purchase, and looking forward to a comfortable future.




Buffini & Co. Used by permission


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