Start Putting An End To Credit Card Debt Now

Start Putting An End To Credit Card Debt Now
by: Michael Redbourn



The steps below clearly explain how to create a realistic budget; how to
consolidate your credit cards; how to reduce the amount of interest that
you're paying; and how to make fewer payments.

Step one involves creating a realistic monthly budget, with "realistic"
being the keyword, because just like a diet, if you can't maintain it,
then it's not only worthless, but it can in fact be damaging.

Before we get underway, you'll need are your last 3 months of bank
statements and if you don't have them, you should be able to download
them, or get them from your bank within a day or two.

Now that you have the three bank statements, make a list of all your
expenses, and I mean all of them.

When you've done that, I want you to divide them into three separate
categories. The first one is for your fixed monthly payments, which will
include things such as your mortgage or rent, a car payment, and maybe
your phone and TV payments. The second category is for monthly payments
that vary, and it should include such things as, groceries, gas,
electricity, vehicle maintenance, and perhaps home repair. The third
category should contain items over which you hopefully have much more
control, like, eating out, entertainment, impulse shopping, and
everything else that doesn't fit into either of the first two categories.

Now make a list of any income that you have regardless of whether it's
salary, welfare, stocks and shares, or a rental property etc.

You've more than likely guessed the next step, which is to compare your
total expenses, to your total net income.

If your expenses are more than your income, then you'll obviously have to
look at the third category and decide how to cut back on some of the
items that are in it.

If after reducing the amounts in the third category, your expenses still
exceed your income then it's high time to consider making serious changes
to your lifestyle, because if you don't then you're going to get deeper
into debt every month, and no amount of reading or effort will help you
until you make those changes.

With any luck your income is more than your expenditure, and if it is
then we can begin to reduce your credit card debt, and the first real
decision you'll have to make, is how much more you're ready to add your
monthly credit card payments.

The bigger the payments the better, and here's why.

If your balance is $10,000 and you pay the present minimum repayment of
$200 per month, then based on an APR of 15% it will take you 6 years and
7 months to pay off the card, and you'll have paid $5,791.21 in interest.
If you'd paid $300 per month instead, it would have taken three years and
eight months to pay off, and you'd have paid $3,017.07 in interest.

If you have several credit cards, which is likely, then the next step is
to consolidate all your credit cards, so that you'll only have one or two
of them to make payments on, and those payments will only be on cards
that have the lowest interest rates.

Deciding which credit cards to keep and which ones to get rid of is not
as simple as you might think because the differences between APR and EAR
make figuring out the actual interest rate fairly complicated.

If we assume a stable balance, and all other conditions remain the same,
an APR of 12.99 percent over the course of a year's worth of compound
interest is the same as an EAR of 13.79 percent which might not seem like
a lot, but if your balance is a large one, or if the repayment time will
be lengthy, then the difference will be significant.

It's easy to find a 'Credit Card Repayment Calculator' on the web, and if
some of your card companies use EAR and others use APR, then simply use
one of the calculators to figure out which cards are costing you more,
and don't forget to take into account the annual cost of the card.

It's almost certain that you receive offers from rival credit card
companies several times a year that ask you to transfer your balances
from other cards to them, and they almost always offer you several months
of a low or even zero percent interest, and it's very important that you
take advantage of these offers. The transfer process is simple, and it
can be done with checks that are supplied by the company, or online, and
you should do it every time the period of low or free interest is close
to expiring.

At the time of writing this article, lots of credit card companies are
doubling the minimum monthly payments, and while it will make it
difficult for many people to make them, it will of course benefit them,
if it doesn't completely ruin their lives first. The problem with the
credit card companies enforcing the change, is that it will force people
to make much higher payments than they'd anticipated, which is a far cry
from the planned method that is suggested here, and one which is still
entirely valid.

So if you're really determined to get rid of your credit card debt,
create your budget; cut down on the number of cards that you have to the
lowest number that's possible; decide how much you're going to add to the
minimum monthly payments; and then smile as you watch your balances come
down quickly.

---

About The Author
More and more people want to lower their debts and two different ways are
currently available. If you want to get out of debt fast then go look at
http://free-from-debts.org and discover how
to eliminate 90% of your debts just by sending a one page letter. But if
you have time and want to slowly reduce debt, whilst also improving your
credit rating, then check out http://pay-off-debts.org which features the famous Debt Free In Three
System.