Ask yourself: What short-term financial goal will make me feel as though I’ m making meaningful progress on debt reduction?
top financial priority.“ You need an action plan to help you work at reducing and eventually eliminating what you owe,” says Gail Cunningham, a spokesperson for the National Foundation for Credit Counseling, a nonprofit organization. This action plan needs to be committed to writing and placed in a conspicuous place where you’ ll see several times each day.
Here are five smart strategies for developing a debt elimination action plan.
1. TARGET JUST ONE CARD FIRST
If you’ re carrying balances on multiple cards, it’ s a long slog to wipe out those debts. So give yourself a boost of instant gratification right from the start, says Mary Ann Campbell, a certified financial planner in Little Rock, Arkansas. Ask yourself: What short-term financial goal will make me feel as though I’ m making meaningful progress on debt reduction?
If your answer is“ Having one card totally paid off,” then throw as much money as you can toward the card with the lowest balance first, says Curtis Arnold, the founder of CardRatings. com, a credit-card – comparison site.( Yes, do this even if you need to pay only the minimum on your other cards in the meantime.) If your answer is“ Boosting my credit score,” then tackle the card with the highest utilization rate
24 HimPower June 2017
Ask yourself: What short-term financial goal will make me feel as though I’ m making meaningful progress on debt reduction?
( that’ s your balance divided by the card’ s limit). Since your score takes a hit if you use more than 30 percent of your available balance, bringing the utilization rate down just 20 percent could significantly increase your score. And if your answer is“ Paying less in interest,” then the tried-and-true method is to pay off the card that has the highest interest rate first.
2. ASK YOUR CREDITORS FOR LOWER INTEREST RATES
Often a simple phone call to the issuer is all it takes to get a reduced rate— provided that you have good credit( a score of 730 or higher) and you are a long-term customer who makes payments on time. You could get a percentage point or two shaved off, which can add up to hundreds of dollars saved annually. One tip to try:“ If you’ ve been offered a lower rate by a competitor, tell the customer-service rep,” says Bill Hardekopf, the CEO of LowCards. com, a credit-card – comparison site.“ There’ s a chance they’ ll match the offer.”
3. TRANSFER YOUR BALANCE( CAUTIOUSLY)
It’ s tempting to move a balance from a card with a high interest rate to a card with a substantially lower one( find one at Bankrate. com). And potentially that’ s a smart