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Getting out of Credit card debt by Forjo
Thursday, June 4 2009 at 11:23 am
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I'm curious to know if everyone know how to get rid of credit card debt. Please leave comments on board entries instead of Blog entries so that everyone can see the blog entries under each other.
According to Suzie Orman on Oprah and most financial planners, even the one on until debt do us part...
Pay minimum payment on all cards except highest interest rate card. To do this look at your Statements; the interest rate is on there.
That card should get a higher amount paid on it until it's at 0.00$, put as much as you can on it to reduce the interest you pay.
Do not cancel this card or any other as this affects your debt to available credit ratio and therefore affects your credit rating, which in turn affects the interest rates you are offered on your loans, mortgages etc. .
Once that card is paid use that larger amount from the first card paid off + the minimum you were paying on the second highest intererest rate card and apply it to the second one while continuing the minimum payment on the rest of the cards.
Once that card is paid off you do the same with the next card and so on until all cards are paid.
For this to work you also have to stop using the cards. The point is getting out of debt...not creating more debt.
Once debt is reduced you need to start saving for hard times (lost jobs, savings for education etc.). You should try to accumulate savings for 8 months of what it costs you to live for 8 months, this is called an emergency fund.
Mine is coming in handy right now, since i've lost my accounting job.
Any comments should be left on the board.
Hint: if you have high balances on your credit cards, you can call your credit card company and ask for a reduced rate of interest; this worked for me (they dont tell you about this, I heard it from a financial planner friend of mine). You can negotiate rates by stating that other companies are offering you a lower rate.
I'd like to invite everyone to post other efficient ways of budgeting here for all to see
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