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Old 03-02-2002, 04:21 AM
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Debt Reduction Tips.....

Okay...I have a pile of credit card debt. I am trying my hardest to pay it off. What is your advice for me? Should I pay off smallest balance first? Highest interest? Tell me how the rest of you cope with credit card debt.

Thanks i know you'll have some great advice for me!
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Old 03-02-2002, 04:33 AM
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The first thing you should do is to make a list of each debt along with their interest rate and balance.

Then realistically, you should pay off the higher interest rate ones first.


If you could pay the minimum balance plus the interest each month. If you can pay more.

For future purchases.. first.. Call your credit card company and ask if you are eligible to have your interest rates lowered. If you are then all future purchases would accumate at the lower interest rate.


Consolidate.... if you have a low interest card, it may be beneficial to transfer a higher interest rate card to the lower one. Not only that, but your minimum payment might be lower on the combine one then the two or three together. (I did this and had it paid off in no time).

Hope this helps. If I think of others I will let you know.
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Old 03-02-2002, 06:49 AM
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Thanks Shawn. Good ideas. I am using MSN Money 2002 and it does have a debt reduction plan but I am still learning how to use it! I am pretty well organized as far as I know who i owe, how much, interest rate...etc. So that part is already done.
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Old 03-02-2002, 12:05 PM
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Kimmyo, I too was in this situation a couple years ago and started reading as much as I could on the subject. There are alot of good books out there. One of my favorite authors on the subject is Mary Hunt " Cheapskate......." I forget the whole title because I read it so long ago but I know the author is Mary Hunt. I also have the Tightwad Gazette Vol.1,2,3. They are very good.
Here are some things I found out:
1. Make NO new purchases by Credit Card!
Credit Card Debt is a habit that you must get
under control or you will always have it.
2. Make purchases only by $$$$$
3. Make yourself a Grid of all the cc and items
you wish to pay off With the Highest interest
items 1st then go down your list with the
lowest.
4. Get a little note book to write down all of these
accounts with their acct #, mailing addresses,
and the phone # Each account should have its
own page so you can keep track of your
payments This way if you wish to make an
extra payment you know where to send it
without waiting for the bill. You will also have
the phone # to verify that they received your
extra payment.
5. The grid come into play because every time you
make a payment make an "X" in the spot next
to this account. That way when you think
you aren't making any headway you can see
that you are.
6. I always started with the Credit Card with the
highest interest rate. You end up paying more
on the CC with the High interest Rate if you
start out paying the one that is low.
7. Once you pay off the item that you have place
that list take what you would of paid to that CC
and put that same amount on your next Bill.
8. ALWAYS pay more than the Min even if it
is only $5.00
When I started looking into this I had CC Debt over $15,000 Dollars I have manage to get it down to at the moment $1600 currently so I know this works. It just takes time. I reevaluated my budget to see if I could come up with extra $$$ to place on my CC. My family and I don't go with out we just plan for our purchases and any emergency that may come up. I hope this helps SORRY if it was more like a book.

Sue
Wife to Bob
Mom to 4
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Old 03-02-2002, 12:37 PM
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Thank you so much Sue! I have seen this method before but I have not seen it on grid. That would really help to make it easier and also show your progress. Again Thanks this is great info a lot of people could probably use!
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Old 03-02-2002, 04:22 PM
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Pinkie Winky To all those past credit cards users

Hi again,

Oh! do I have a horror to tell about some companies that i had credit cards with, but I would just like to pass along that most companies will not work around payment plans and reducing your interests rates even if you sending them a larger payment. I would try to Debt consoldate "Profinia" is great company to help you do this, After about 3-4 months of the payments going out, the credit companies SOME will reduce interest rate and cancel late fees all together. We were in so deep that we had to Rent this very high apartment, cause our credit would not go for a house. We would live to the most of what we got, but now that i plan,organize,go over plans of bills, and consoldate we are living a happier life. I hope this helps to who ever reads.......

Mrs. Richardson
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Old 03-02-2002, 04:55 PM
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I personally agree with starting with the card with the highest interest rate. Pay as much as you can on it each month and the minimum payment due on all the rest until that card is paid off. Then you move on to the card with the next highest interest rate. Pay as much as you can on it each month and the minimum on all the rest. Keep on with that process until they are all paid off.

I just finished reading Financial Peace by Dave Ramsey and he suggests making a list of all your debts, listing from lowest owed to highest owed (don't pay attention to the interest rate). You start with paying off the lowest debt. You pay the maximum you can toward that debt each month and the minimum payment on all of the others. Then when that is paid off you move on to the next lowest debt and keep going through the process. He said he prefers this method because it gives you a more instant gratification of having paid off a debt and helps keep you more inspired.

Good luck!
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Old 03-03-2002, 04:55 AM
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Wow ya'll have really put some great ideas out there for me!

I have heard a lot of people reccomend paying off the smallest debt first for the instant gratification! I am going to mull over these ideas and make me a grid (I really like that idea!) and begin attacking these credit cards with more vengence!

I was wondering if I combined your ideas:

1) Pay extra on the highest interest card.

2) Pay extra on the smallest debt.

3) Make minimum payments on the rest.

Do you think this would be a good plan or just confuse me more?

I'm a little skeptical about debt consolidation companies though. Will that not screw up my credit rating?
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Old 03-03-2002, 08:28 AM
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If you can find the book by Dave Ramsey that I mentioned, I highly suggest you read it (I was able to find it at the library easily). He talks about debt consolidation (doens't recommend it) and just about anything else you can think of. He lays out clearly his reasons for what he suggests and doesn't suggest.

I personally wouldn't do what you listed (paying extra on largest and smallest and minimum on everything in between) - I would find that confusing and I just personally think it would be better to take one of the two suggested approaches.
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Old 03-03-2002, 09:06 AM
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We did not go through a debt consolidation company but rather took a home equilty loan with a reputable bank/company with the lowest rates.

This was well worth it for us and cleared up our credit so it is now way way better then before
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