By Lisa Leslie
One of the best financial steps you can take is to pay off credit card debt. Eliminating credit card debt will save you many dollars in interest charges. This will mean less of your income will be lost on interest charges. It’s almost like a boost in pay!
Steps to reducing debt:
- Stop using credit like extra cash. This means your spending needs to be less than your take home pay.
- Make a list of all your debts. The list should include the balance, interest rate, and monthly payments.
- Generally, paying off loans that are at the highest interest rates first is the way to save money on interest payments.
- Pay more than the minimum balance each month.
- Track all expenses. This will help you figure out areas where you are overspending.
- Be wary of high interest consolidation loans. If you are carrying a large amount of debt compared to your income or you have a poor credit score, you may not be able to get a consolidation loan at favorable rates.
- Avoid payday loans. These loans usually have a very high interest rate.
- Shop carefully and be vigilant if you decide to use a credit counseling service. Beware of companies that promise that you will pay significantly less than you owe. This could hurt your credit score. Debt reduction can take time, but usually comes with long term benefits.
