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