3 Steps to Coming up with a Credit Card Debt Management Plan
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Credit card debt management can be easy so long as you are willing to expend the effort to plan out exactly what you wish to accomplish. Whether you are looking to eliminate all your debt, or simply pay off a single credit card, debt management is simple once you learn what needs to be done.
The first step in setting up your plan is knowing who you owe money to, and how much you owe. Gather together all your recent credit card statements and start crunching the numbers. You want to know how much your total debt is, and then you should divide that up into sections on how much you owe each company. Make sure to record your interest rate, as this is going to influence how much you will be paying when you decide to pay off a debt.
You should also analyze and record your total monthly income. This will allow you to determine what amounts of money you can dedicate to paying off your debt. Remember, in order to effectively begin reducing your debt, you are going to have to pay more than you are being charged.
Coming up with a Credit Card Debt Management Plan, Step 2:
Once you know how much you owe, whom you owe it to, and what your monthly income is, you can begin to formulate your plan. This is the process where you will decide which debts to pay off, which to pay the minimum, and generally how to spread out your money.
You can decide to start by paying off the highest debt or the lowest, but you are better off paying your low debts off first. No matter which way you go, it is going to take the same amount of time. The theory behind paying off the low debts is that you will get them off your credit report faster, and then the money that was going towards those debts can be applied to a larger debt.
Whichever way works for you is the way to go. Make sure you make minimum payments on all your credit card debt, and then use any remaining funds you can apply all towards one debt. This will allow you to pay off your debts as quickly as possible.
Coming up with a Credit Card Debt Management Plan, Step 3:
Once you have this part out of the way, it is now a matter of actually paying your debts. The key to this part of the plan is staying committed. Don't tell yourself it is alright to miss a payment. You must make every payment and remain dedicated to paying off your debts.
If you maintain your discipline, you will watch your debts steadily fall, all the way down to zero. Once you have eliminated your debt, make sure you don't acquire more. Manage your money, and credit, wisely, and you will never have to go through this process again.
Posted by jonathan on February 03, 2005 at 06:44 PM