Didyou start the new year with a mountain of debt? Don’t feel bad; millions ofpeople are in the same boat. But no matter how much you owe, you can makechanges today to get out of debt and build a stronger financial future.
BetterBusiness Bureau and ClearPoint Credit Counseling Solutions are encouragingconsumers to be “calculated budgeters” in their efforts to get out of debt. Hereare five tips to help you be more calculated in budgeting and debt reduction inthe new year:
#1 Set up a household budget to guide yourspending patterns. Adjustexpenses to find extra money to pay down credit card and other revolving debt –even $50 a month will help.
#2 Choose a method. Debt managementexperts advise either paying off higher-interest balances first (this is the laddermethod of debt repayment) or paying off smaller balances first (called thesnowball method, because you build momentum). Either way, you’ll be moving inthe right direction.
#3 Ask for lower rates. Most credit cardcompanies will lower interest rates when asked, especially if you mention a“hardship plan.” Lower rates mean your payments go more toward principalinstead of interest.
#4 Send extra payments. Make at least theminimum payment each month on every account, but send that extra amount to thechosen payoff account. As soon as that debt is paid off, put its payment and theextra toward the next account on your target list.
#5 Stick to the plan. It can be temptingto use your credit cards again once the balances are lowered, but that willonly make it harder to get out of debt, and the process may take much longer. Resistthe temptation and keep your eyes on your long-term goal.
Toget started with budgeting and debt reduction, check out this Budget Calculator from Clearpoint CreditCounseling Solutions.
Formore tips you can trust, visit bbb.org.