Paying Off Your Credit Cards and Other Debts
With the UK economy in the shape it’s in today, it’s tempting to run and hide from our debt troubles. But the fact remains, the longer you leave your debt in place, the worse things will get for you. Therefore, it’s important to act now to eliminate your credit card and other debts. Here are the steps you need to take to do so:
1) Set your priorities. You need to find out which debts need to be paid off first, some can wait a bit longer, while others (such as high-interest credit cards) must be taken care of now. A mortgage repayment is another example of high-priority debt, since failing to pay it could force you out of your home. A low priority debt, on the other hand, might be a student loan (which lenders assume will take a while to repay).
2) Keep up with all minimum monthly payments. No matter if you start tackling your largest debt first, your smallest, your most or least expensive interest payments, it’s essential that you pay the monthly payments on all debts and cards. If you don’t, you will cause serious harm to your credit score, which in turn will reduce your chances of getting credit in the months and years to come.
3) Set up a budget. This will help you to know exactly how much spare money you have to repaying your cards and debts.
4) Raise your monthly payments. It’s obvious, but most people need to be reminded of this: You’ll get rid of your debt faster if you do more than simply paying the minimum each month. And there are many ways to raise the extra money for doing this, you can rent your driveway, sell an old mobile phone, sell unwanted belongings on eBay, etc.
5) Use money from your savings to help clear debt. In most cases, the money you will save by clearing your debt early will more than make up for the tiny amount of interest you lose by taking money out of your savings account.
6) Learn the art of Snowballing. This simply refers to making the minimum payments on your credit cards and debts, but then using extra cash you have to completely pay off one of them at a time. After you’ve cleared this first debt, you’ll have even more extra cash to use to completely pay off another debt. Keep doing this until you’ve cleared all cards and debts.
7) Finally, be willing to ask for help from a debt charity. You might be surprised how much help there is available for you if you’ll simply lower your pride enough to ask.
And by the way, while you’re asking for help, talk with the lender, sometimes they are willing to offer you some assistance, or, if nothing else, they’ll be willing to give you an extension on time. The key, in many cases, is to keep the lines of communications open and not try the useless burying your head in the sand trick.
