When reviewing your budget and making a plan for managing debt, it’s important to focus on moving forward. Criticizing yourself and your family for spending too much isn’t going to improve your debt situation. Instead, make a team effort toward paying off debt and moving toward a cash-based household budget.
Knowledge is power: Identifying and documenting debt
This can be the most unappealing aspect of debt management, but documenting your debt is important for establishing where you are today, and where you want to be. Here are some important aspects of recording and tracking credit card debt:
Who you owe: List your creditors by name and mailing address
What you owe and what it costs: Enter the most recent balances for your credit cards and their annual percentage rates (APR) The APR is clearly posted on each statement.
Minimum monthly payments: Ideally, you make more than minimum payments, but documenting the minimum payments helps with preparing a household budget.
Be thorough (and honest) when documenting debt. The next step is prioritizing credit card debt repayment and determining if you’ll need debt help.
Credit card debt: Prioritizing debt payments
These steps are helpful for determining which debts to pay off first, and for ensuring that you have enough funds to repay creditors without incurring more debt or shorting other household expenses.
Highest APR first: Generally, it’s best to pay off your highest APR credit card debt first. Start your debt repayment plan by paying as much as you can toward your highest APR debt while paying minimum payments on your remaining accounts. When your first debt is repaid, apply the funds you were paying on it toward the next highest APR debt. Repeat these steps until your debts are paid.
Beware of special offers and promotional periods: Many of us have used low to no interest introductory offers for transferring credit card balances or buying big ticket items offering no interest if paid off within a specific period. If you’re approaching deadlines for paying off special promotion balances, pay these balances first. Failing to meet such deadlines can result in deferred finance charges being added to your balances.
Don’t close credit card accounts: If you’re able to avoid using credit cards, put them away and use only cash or a debit card. Closing accounts can lower your credit scores by reducing your overall available credit.
Consumer credit counseling and debt consolidation services can assist with arranging affordable repayment plans with creditors and developing a household budget.. These programs can be a good alternative to filing bankruptcy or falling for “credit repair” scams.
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Welcome to the DebtHelp Blog
This blog covers a wide variety of debt consolidation and loan topics.
We rely on a large network of financial experts and leading authors to write the content for the DebtHelp.com Blog.
Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.