Credit Concerns: How to pull out of debt
Posted By: Matt in Credit on 05/12/2016 at 13:06:13
Patience is always a virtue but that sentiment couldn't be more apparent and relevant then when you're talking about money, more specifically credit card or any sort of debt that is mounting and you feel as though you'll never get ahead or even close to being out of debt any time soon.
How do you know if you debt has taken hold of you to the point that you're in need of a major overhaul·
If your debt is being handled on a very minimum basis, you aren't going to do anything but pay an extraordinary amount of interest and never get out of debt. And by "never," you're talking decades of paying.
The minimum payment works if you're just trying to pay on time, but paying on time might help your credit score to some degree, but if you're maxing out lines of credit and are nearly at your ceiling on credit cards, you're going to be viewed as a credit liability.
You can't just pay the minimum payment if you expect to get out of debt.
The best advice is to start with the smaller amounts of debt you have and pay them off so you can continue to pay down total debt and set mile markers of sorts of yourself so you can see progress.
Naturally as you move on to lines of credit with higher balances, you have to begin picking based on not only amounts owed but also the amount of interest that you're paying. Higher interest cards should be the first of your priorities if the balances are roughly the same between two or three cards or lines of credit. The higher rate as your main focus means if you have $500 to pay on credit cards, make sure the majority of your credit budget goes toward that higher card in the attempt to pay it down and stop paying extra in the form of the high interest.
Often what tends to be overlooked as far as paying off debt is your income. You can cut expenses out of your budget, such as cable, cell phone extras, clothing and restaurant dining and that extra income that you created from saving can be used to pay off more of your debt, so while that money won't be put aside you can climb out of debt faster.
If you're in debt and it is sizable, you have to remember that this is going to take time, but that doesn't mean you have to pay only the minimum but rather make a few adjustments to maximize just how quickly your debt goes away.
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