Now that you have started to Regain Your Credit and are Getting Back on Track now we must talk about how to pay down your debts. The first thing you must realize is to stop using credit, afterall, that’s what go you into this mess. If you must pay with your credit card, make sure that you’re able to pay off the entire amount when the bill comes. Also, NEVER pay a bill with a credit card, you’re paying more by paying interest. Paying a bill with a credit card needs to be avoided at all costs.
Are you thinking “Well how am I suppose to pay my bills then?” There are all types of ways to generate extra income. Those baby clothes that are sitting in the basement can be sold to stores like Once Upon A Child, on Craigslist, and to friends and neighbors. I suggest going around your home and getting rid of things that you haven’t used in a year. So that toaster oven that you received three years ago and been sitting in the cabinet can now be turned into cash and can begin to pay down your debt!
Another thing to consider is if your credit card comes with a points rewards. If so, consider trading these points in for a gift card to a local grocery store or even a pre-paid credit card!
So let’s work on getting your debt gone!
1. Pay all “secured debt” first. This includes mortgage and car payment(s).
2. Once the secured debt has been paid, pay the highest interest rates first with making as much as you can of an additional payment to pay the debt off quicker.
3. With the lowest interest rates pay the minimum payment.
Debt consolidation should only be sought in the instance that there are to many accounts with a high interest rate as well as a high balance. Debt consolidation will combine and downsize debts so that they become easier to repay.
As always, call your creditor and let them know why you are unable to make the correct payments. Creditors are more likely to rearrange your payment options that are more affordable. Afterall, companies would rather receive something vs. nothing.
All information are thoughts and opinions of my own. My no means am I a financial advisor or credit specialist.