Pay Off Bills - Get Out Of Debt

Debt Consolidation - Loans & Credit Card Bill - Debt Consolidation

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Pay Off Bills, Get Out Of Debt

You're credit card is maxed out, now it's time to deal with it.

Your neck deep in credit card debt, just paying the minimum with no end in sight. What's the best way to get it all under control? The best way to get rid of debt, experts agree, is to attack the balance with the highest annual percentage rate first. When that one is paid off, move onto the debt with the next-highest interest rate. On that debt, you want to "double, triple, quadruple minimum payments. When you're done with that one, move on to the next one. Size up bills by interest rates rather than the amount of the balance.

An alternative plan is to pay off the littlest balance first and eliminating a bill or two from that thick monthly pile. Psychologically, it will give you the boost you need to stick with a pay-down plan. Progress begins with that first step and anything you pay down or off is a step in the right direction. It may make more sense to pay down those account with the highest interest rate first, but sometimes sometimes people get discouraged and knocking off a bill or two only encourages you to stick with a plan. But once those smaller balances are gone, go back to Plan A: Paying off those bills with the highest interest rates first.

Stick to your plan
The key to an effective pay-down plan is sticking with it- Discipline, don't let up on the monthly payments as the credit cards' minimum payments inch down and as bills get paid off.

Once you establish a payment plan with a credit card bill, stick with the payments until it's gone and then roll it into another credit card and keep going. Set a goal that you can afford to keep. Make it realistic, otherwise you are setting yourself up for failure.

Think things through before you act
To avoid falling into that trap, set up a budget. List all sources of income and all expenditures and subtract the former from the latter. Hopefully, you will have net positive. This will be a good starting point. You now have a visual and mental picture of where you stand and what you could realistically set aside each month towards paying down your debts. Just $50 a month extra towards your debts can make a big difference in the long run.

To further help you reach your goal, consider the following:

* Brown bag 10 lunches per month.
* Have movies and popcorn at home instead of going out.
* Use coupons for groceries and buy store brands.
* Make pizza at home instead of ordering out.
* Buy in bulk and freeze dinner entrees.
* Give handmade cards and gifts.
* Shop at consignment, thrift and discount stores.

Always pay more than the minimum
Start paying more than the minimum. Once you do, debts start to disappear. Take for example a $3,000 credit card balance, by making the $60 minimum payment, it would take eight years to pay off and cost you $2,780 in interest. Just pay an additional $50 and you would pay it off in 3 years and save $1,800 in interest. Use Bankrate.com's credit card minimum payment calculator to see how increasing your payments will cut your time in debt.

It is also important to keep in mind that debt is not always bad.

Having a certain amount of credit balance is not negative. Some debt is necessary to reach goals, like getting a home, for example.

But most experts recommend that debt payments including car payments and credit cards eat up no more than 10 to 15 percent of income. More could spell trouble.

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Debt Consolidation - Loans & Credit Card Bill - Debt Consolidation

Last Updated:
Monday, February 28, 2011

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