Kiss Your Debt Goodbye!
Getting rid of debt is something that I am very familiar with. I used to carry balances on my credit cards and I have a whole lot of student loans that I still need to pay off. It's not fun when a large chunk of your paycheck has to go towards paying debt. From my own personal experience, there are a few things that worked for me and while they aren't the only ways to go about your debt, they're a good place to start.
- Pay off debt with the highest interest rates first! If you have a credit card with a 22% interest rate, pay that sucker down as fast as possible. If you only pay the minimum on it each month, you are basically throwing away your money.
- If you can afford to, pay more than your minimum payment every time. This will help you pay down your principal balance faster and you'll end up paying less interest in the long run. See more about this below.
- Take advantage of intro offers of 0% APR on balance transfers. If you have a high balance and your interest rate is pretty high, you might benefit by transferring your balance to a new card that offers a 0% interest rate for 12 months or more. Be sure to read all of the terms and conditions for each offer and don't forget that most balance transfers come with a fee of 3% of the transferred balance.
CreditSourceOnline.com has a great article that explains why paying more than your minimum makes sense:
"Fast forward several months of paying the minimum payment due on a maxed out credit card and you will find that the principal balance on the card has decreased very little if even at all. This is because the minimum amount due really only covers the interest accumulated on your total balance over the last billing period. This basically means that for those several months all the money you have sent to your credit card company did nothing in the way of paying off the balance on your credit card. Simply put, you have been paying for nothing; rather, you have been paying the credit card company for the privilege of using their money all those months ago, over and over again" (http://www.creditsourceonline.com/minimum-credit-card-payment.html).
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