Seven Tips to Ease Your Debt
6) Budget yourself for a regular monthly payment. Wait, isn't the point to pay off your cards? Yes, and no. Gaining financial control should be your primary objective, and if you are in over your head then paying off the cards should be your first concern. Pay off the lower balances first, and once paid off apply it to the next one until you are finished. Yet, credit card issuers, bank, mortgage companies and auto loan experts prefer to see a long history of regular and responsible credit usage. To this end, do not carry balances more than 25% of your yearly salary, and do not over-extend yourself beyond your budget. So set that money aside every month, and once you obtain your dream house and car, by all means pay off those cards.
7) Last, but not least, buy only what you can afford. Sounds easy, but come holiday seasons the real temptation begins. In theory, you can literally nickel and dime your credit into oblivion, so keep a sharp eye on those expenditures. Set aside a comfortable amount that you can pay every month, and make it your target. Card issuers often charge a monthly payment equal to 4% of your outstanding balance, and you can plan your monthly payment accordingly. (Consult your credit card terms & conditions for exact figures before using this approach.)
With careful planning, you can turn those deadly cards into a powerful tool to boost your credit. Who knows? Maybe you'll finally qualify for one of those car offers for 0% financing. Make those cards work for you.
