Debt Management http://www.wisebread.com/taxonomy/term/7681/all en-US All the Ways Minimum Payments Are Evil http://www.wisebread.com/all-the-ways-minimum-payments-are-evil <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/all-the-ways-minimum-payments-are-evil" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_laptop_credit_card_88164697.jpg" alt="Man learning ways minimum payments are evil" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Anyone who has a credit card is familiar with minimum payments. Most credit cards don't require cardholders to pay off their balances in full every month, but they <em>do</em> require cardholders to pay some minimum amount. This can be as low as 2% to 3% of the outstanding balance, or a minimum of $25 or $35 &mdash; whichever is higher.</p> <p>While paying the minimum technically keeps your account in good standing, there are negative consequences to this decision. Here are five reasons why minimum payments are evil and should be avoided.</p> <h2>They Keep You in Debt</h2> <p>Minimum payments may keep your credit card bills affordable, but you have to consider the big picture. In the end, minimum payments don't benefit your bottom line &mdash; they benefit your credit card company.</p> <p>The truth is, minimum payments are a sneaky trick designed to keep you a slave to credit card debt. The longer you keep a balance on your cards, the more money your creditors earns off you. If you only pay your minimums every month, you'll carry your balances for years to come. For example, if you have a credit card with a $2,000 balance and 17% interest rate, and you only make minimum payments each month (2% of your balance), it will take you <em>over 21 years</em> to pay it off. You'd have paid over $3500 in interest alone &mdash; and that's if you don't put additional purchases on the card.</p> <p>That may seem like a shock, but that's exactly why the minimum payment schedule was designed. Because they're taking a <em>percentage</em> of your balance, every month, the minimum payment required goes down. That does two things &mdash; encourages you to pay <em>less</em> so that you keep the balance longer, and it also tricks you into thinking that you're actually making progress paying off your debt. If you see that your payments are getting lower, you feel like your debt is getting smaller too. But you're actually hardly chipping away at the debt at all.</p> <p>If on the other hand, you pay $50 per month, it will take you five years to pay it off, with about $970 in interest. That's a huge difference compared to 21 years and $3500 in interest. Every little bit of extra you can put into your credit card debt will significantly cut down on your repayment time.</p> <p>If you can make reasonable plan and keep to your budget, a <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">balance transfer will put a pause on interest payments</a> and help you <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">pay off debt faster</a>.</p> <h2>Purchases Become More Expensive</h2> <p>Credit cards might be convenient, but they're also costly &mdash; and unfortunately, if you carry a balance from month-to-month and only make the minimum payment, you end up spending much more for every purchase made with the card. And once you leave a balance on your card, the grace period disappears and you immediately start accruing interest the moment you make your purchase. Grace periods are only active if there is no outstanding balance. (See also: <a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">Everything You Didn't Know About Credit Card Interest and Grace Periods</a>)</p> <p>If you have to make a large purchase, you can get a card with a <a href="http://www.wisebread.com/5-best-credit-cards-with-0-apr-for-purchases?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">0% introductory APR on purchases</a>. For a certain period, no interest is charged on your outstanding balance. This gives you time to pay off the purchase without interest. However, once the intro period is over, the regular APR will kick in. It's important to only use that opportunity if you know you can pay off the balance during the introductory APR time period.</p> <h2>Your Credit Score Can Suffer</h2> <p>In my younger days, I thought as long as I paid my minimum payments on time, my credit score was protected. I was young and dumb and didn't realize how other factors impact credit scoring.</p> <p>Paying only the minimum may not have a direct negative impact on your score, but it doesn't exactly help it, either. A high credit card balance can result in a higher <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">credit utilization ratio</a>, which is the percentage of outstanding debt in comparison to your available credit line. Credit utilization is the second biggest factor making up your credit score, and if your credit card balances exceed 30% of your available credit, your score will take a hit.</p> <p>You can lower your credit utilization ratio &mdash; and subsequently improve your credit score &mdash; by paying more than your minimums every month. Minimum payments are just that &mdash; minimums. Even if you only double or triple your minimum, this will chip away at what you owe and reduce how much you pay in interest significantly.</p> <h2>It Affects Other Areas of Your Financial Life</h2> <p>Paying only the minimum might not seem like a big deal, until you realize how this decision can impact other areas of your financial life. If you're only making your minimum and carrying a high balance on a credit card &mdash; resulting in a lower credit score &mdash; this affects the ability to get other types of financing. If you apply for a mortgage or an auto loan, lenders will take one look at your high balances and low score and consider you a risky applicant. There's a chance you won't qualify for some loans, or the bank might not offer favorable terms.</p> <h2>Minimum Payments Can Increase</h2> <p>Another problem with minimum payments is that they aren't carved in stone. Credit cards are a revolving type of credit account. As your balance goes up, so does the amount you owe. Your minimum payments might be manageable today. But if you continue to charge to your account and don't make any efforts to significantly decrease the balance, your minimum payments can increase. If you're already struggling with your budget just to meet the minimum payments, the most important thing is to sit down and make a <a href="http://www.wisebread.com/5-day-debt-reduction-plan-stop-waiting-for-tomorrow?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">debt repayment plan</a>. Otherwise, you'll be stuck in this cycle of debt for generations.</p> <p><em>Do you pay the minimums on your credit cards?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/all-the-ways-minimum-payments-are-evil">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-dirty-secrets-of-credit-cards">The Dirty Secrets of Credit Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-being-debt-free-can-cost-you">7 Ways Being Debt Free Can Cost You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-balance-transfer-offer-a-good-deal">Is a Balance Transfer Offer a Good Deal?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Best of Personal Finance: Credit Where Credit Is Due Edition</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management APR credit score credit utilization ratio interest rates minimum payments Fri, 22 Jul 2016 09:00:05 +0000 Mikey Rox 1756968 at http://www.wisebread.com 7 Money Moves to Make as Soon as You Conquer Debt http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-money-moves-to-make-as-soon-as-you-conquer-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_happy_sunset_79384959.jpg" alt="Woman making moves after conquering debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Congratulations &mdash; you're debt free! Now what?</p> <p>The road to debt elimination was long and treacherous, but just because the black cloud of lingering bills is no longer hanging over your head, that doesn't mean your financial house is in order. It's in better shape, sure, but you've still got a ways to go. To continue working toward that goal, here are a few smart moves you should make as soon as you get out of the red:</p> <h2>1. Rearrange and Trim Your Budget</h2> <p>Your top priority when getting out of debt is to not get back into debt. To accomplish that, you'll need to make changes to your spending and savings habits. You'll also need to revisit your budget and rearrange your priorities. Now that you don't have credit card or loan payments bleeding you dry every month, you'll have more disposable income &mdash; and you need to decide what you'll do with it to improve your quality of life and set yourself up for the future. Cut out anything that's unnecessary: Maybe it's the cable that you don't watch much of, the gym membership you don't use, or subscriptions to services you can live without. Whatever is it, cut the fat and don't look back.</p> <h2>2. Get Back to Building Your Emergency Fund</h2> <p>If you've been digging yourself out of a negative-money pit, chances are you don't have much of an emergency fund &mdash; and that needs to change ASAP. Building an emergency fund is the best way to avoid a potential debt scenario in the future. You'll be able to draw from that account to pay off life's little surprises in full, so you're not constantly treading water every time something unexpected happens.</p> <p>&quot;I recommend having an emergency fund saved up equal to six months' worth of expenses,&quot; says financial planner Russell Robertson of Alidade Wealth Partners in Atlanta, GA. &quot;This will give you time to get back on your feet if something unforeseen happens without completely disrupting everything in your life.&quot;</p> <h2>3. Check in on Your Credit Situation</h2> <p>Brace yourself. If you've been battling debt for an extended period of time &mdash; especially if you've only being sending in minimum payments &mdash; your credit situation is likely less than ideal. The good news, however, is that you're in the clear now (debt-wise, anyway), and this is the best time to <a href="http://www.wisebread.com/what-does-your-credit-score-mean-good-bad-or-excellent?ref=internal">start rebuilding your credit</a>.</p> <p>Having a solid credit score puts you in a strong position when you need to finance a purchase, like a house or car, or apply for a new line of credit. It's always a good idea to know where you stand with credit and take steps to improve it.</p> <h2>4. Max Out Your Matching-Dollar Opportunities for Retirement</h2> <p>Like your emergency fund, contributions to your 401K and IRA were probably low (or perhaps even nonexistent) while you concentrated on paying down your debt. With more funds freed up now, it's important to start concentrating on your future &mdash; especially your retirement goals &mdash; and that includes maxing out dollar-matching opportunities to take full advantage of free money.</p> <p>&quot;401K plans in 2016 have a contribution limit of $18,000 a year, plus an extra $6,000 for people over 50, so with no debt to pay, you might have the opportunity to reach that limit now,&quot; says financial planner and investment adviser Jaycob Arbogast of Arbogast Advisers. &quot;Similarly, an IRA has a $5,500 limit for people under 50 and a $6,500 limit for people 50-plus, so maxing out those plans might be a good idea too. For example, with a 6% return, adding an extra $5,000 each year to your retirement savings from age 50 to 60 could add an additional $65,000 to your retirement savings. That's a great boost that someone in debt might not be able to maintain.&quot;</p> <h2>5. Start Investing With Long-Term Returns in Mind</h2> <p>Personally, I recommend investing in real estate, but what you invest in is up to you, so long as you're investing. Outside of your emergency fund, your money should never sit in a savings account earning fractions of pennies. Instead, you'll be better off putting that money in places that promise bigger returns over the long term, so you can meet your savings goals sooner and continue making more investments for (hopefully) a more prosperous life.</p> <p>Alternatively, Robertson recommends the stock market.</p> <p>&quot;If your budget still has room for more saving, put that money to work by investing in the markets,&quot; he advises. &quot;Exchange-traded funds (ETFs) are a great way to get diversified, low-cost exposure, and many online brokerages will offer commission-free ETF options as well.&quot;</p> <h2>6. Put Money Back Into the Investments You Already Have &mdash; Like Your Home</h2> <p>For many people, their homes are their biggest investments. To ensure that investment pays off the way you want and need it to, you have to maintain it. Thus, when you've paid off your debt, start thinking about home improvement projects that will increase value. Just be careful that you're not taking on projects that cost more than the house is worth. The last thing you need is to dump your savings into your home if the project doesn't enhance the house enough to make it worthwhile in the long run.</p> <h2>7. Open a Money Market Account for Higher Interest on Savings</h2> <p>If you have a substantial amount of savings in your emergency fund &mdash; and you should &mdash; that money shouldn't be in a traditional savings account. Contact your bank, or research others, to find savings accounts that offer the best interest rates, like money market accounts or high yield savings. Bottom line, there's absolutely no reason you shouldn't be getting the most bank for your buck, especially where savings are concerned.</p> <p>Robertson agrees, and in this particular case, rescinds his recommendation to invest in stocks.</p> <p>&quot;If there is something specific you are saving up for &mdash; a celebratory trip to Europe? A wedding? &mdash; within the next two to three years, I would recommend keeping that money out of the stock market,&quot; he says. &quot;Instead, consider a money market account or CD from an online bank. In many cases you can get close to 1% interest right now on cash that is still guaranteed up to FDIC limits (currently $250,000). In fact, this is a good idea for that emergency fund as well &mdash; something that earns interest and is separate from your everyday checking account.&quot;</p> <p><em>What else should the newly debt-free do with their money?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-biggest-myths-about-investing">The 10 Biggest Myths About Investing</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-pay-down-debt-first-or-invest">Should You Pay Down Debt First or Invest?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/401k-or-ira-you-need-both">401K or IRA? You Need Both</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-online-sites-for-building-wealth">Best Online Sites for Building Wealth</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-you-making-the-biggest-investment-risk-of-all">Are You Making the Biggest Investment Risk of All?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Debt Management Investment 401k advice credit score emergency funds ETFs home improvements IRA money moves retirement stock market Fri, 15 Jul 2016 09:00:17 +0000 Mikey Rox 1752364 at http://www.wisebread.com The Key to Debt Reduction May Be a Simple Picture http://www.wisebread.com/the-key-to-debt-reduction-may-be-a-simple-picture <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-key-to-debt-reduction-may-be-a-simple-picture" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_art_drawing_92715063.jpg" alt="Woman using simple picture to reduce debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you do a quick Google search for &quot;debt art,&quot; you'll be either confused or underwhelmed. It's likely you'll find articles on artists accumulating or <a href="http://www.wisebread.com/5-things-debt-collectors-dont-want-you-to-know" target="_blank">dealing with debt</a>. But, there is another type of debt art that you need to know about. Not only can it help you pay off debt more quickly, or reach a financial goal, but it can brighten up your environment with something that represents a real personal success story.</p> <h2>First Thing's First &mdash; What Is Debt Art?</h2> <p>Quite simply, debt art is a piece of art that helps you reach a financial goal in a creative way. Whatever the goal is, be it eliminating credit card debt, a student loan, saving for a vacation, or paying back taxes, debt art removes the hard-edged numbers and spreadsheets and instead lets you visualize, and track, your progress.</p> <h2>How to Create Debt Art</h2> <p>It may sound corny, but the only limit to debt art is your imagination. Of course, people with more artistic flair can really go to town on it, but all you really need to do is find a fun way to track your progress. It's also good to have the debt art in a prime location in your home or office, so that you are reminded daily of your development.</p> <p>The simplest solution is a series of squares that you color in. Each square can represent a set amount that you are putting towards your goal &mdash; say, $50 per square. You want to save $1,000 for a vacation, so you create 20 squares that need to be colored in. As you save each $50, you color in a square. When every square is filled in, congratulations! Debt art has helped you reach your goal.</p> <p>Of course, that's not very interesting. Some people have taken debt art to much more creative extremes. Take, for example, Amy Jones. On her blog, <a href="http://mapyourprogress.com/blog/how-i-paid-off-more-than-26000-in-debt-by-coloring-this-in/">Map Your Progress</a>, she outlines a truly wonderful piece of art that helped her reduce her debts by $26,000!</p> <p>The art was not difficult to create. As you can see, it's a series of swirls, arranged in a kind of floral pattern. At first, the lack of color on the poster looks overwhelming. The goal, to have every $100 swirl filled in, looks like an impossible task.</p> <p>However, slowly but surely, Amy colored in those swirls. The sense of achievement, and the visual indication of reaching a goal, was powerful enough to keep her going. &quot;Coloring in those swirls month after month helped me feel like I was doing something, &quot;she said. &quot;It helped me see that I was making progress toward my goal of zeroing out my credit cards.&quot;</p> <h2>Why Debt Art Works So Well</h2> <p>It's all about breaking down something insurmountable into something very achievable. If you look at a debt like $5,000, it can seem incredibly overwhelming. So much so, that it's easier to forget it, ignore it, or hope it goes away.</p> <p>But, when you split up that $5,000 into more manageable chunks, it suddenly doesn't feel as tough. Instead of $5,000, you're looking at a picture of 200 circles, each one representing $25. How easy is it to color in one of those $25 circles? One leads to two, and three, and before you know it, you've made a $200 dent in that debt.</p> <p>The ability to track progress based on these much more achievable goals means that it's easy to see and make progress quickly. The great thing is, you can customize it to something you believe will work for you. If $25 chunks are too big, try $10, or even $5. You might like the feeling of coloring in several $5 chunks in one day, or week, over one $50 chunk. But as you see the black and white canvas become a rainbow of colors, you are spurred on to achieve your financial goal.</p> <h2>Ideas for Your Own Debt Art</h2> <p>You don't have to have artistic abilities or flair to create something that will be both fun to look at, and easy to track. Here are some ideas to get you started:</p> <ul> <li><strong>Bricks in a Wall</strong> &mdash; You can print out a simple brick pattern from a Google search, and then use it to create a building or tower. Each brick can represent a specific sum of money.<br /> &nbsp;</li> <li><strong>Legos</strong> &mdash; Here, you don't need to draw anything. And you can approach this piece of debt art in two ways. Either build something up, or knock it down. Each Lego brick can represent a sum of money, and you can either add to a tower, or remove a brick (perhaps revealing something behind it&hellip;an image of something you're saving for is one fun example).<br /> &nbsp;</li> <li><strong>Circles</strong> &mdash; Draw a series of circles until you have covered the page. You could have different sized circles for different amounts (big circles = $50, small circles = $20). When all the circles are filled in, you have reached your goal.<br /> &nbsp;</li> <li><strong>Coloring Books</strong> &mdash; If you really feel put off by the idea of creating your own art, why not find a coloring page from a book and have it enlarged? These <a href="http://amzn.to/29IGiYh">adult coloring books</a> are all the rage right now. Find a pattern that easily translates to something that can be used to track finances, and print it out poster-sized.<br /> &nbsp;</li> <li><strong>Ask the Kids </strong>&mdash; Kids of all ages love creating and coloring. If you want something that you can have as a keepsake after, ask the kids to draw something that you can fill in every week. Maybe they will draw a bunch of happy faces, cats, trucks, or fruit. They can help you color it in, too, giving you something that has meaning beyond the monetary success story.<br /> &nbsp;</li> <li><strong>Use Amy's Debt Art Maps</strong> &mdash; Amy has some available for <a href="http://mapyourprogress.com/fancy-prints/">purchase at her site</a>. They come in a variety of sizes and shapes.</li> </ul> <p><em>Have you used art to motivate you to reach a goal?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/the-key-to-debt-reduction-may-be-a-simple-picture">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-dont-ever-stop">5-Day Debt Reduction Plan: Don&#039;t Ever Stop</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up">5-Day Debt Reduction Plan: Add It Up</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/try-these-6-money-saving-challenges-now">Try These 6 Money-Saving Challenges Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management coloring creativity debt art drawing goals saving money Tue, 12 Jul 2016 10:30:07 +0000 Paul Michael 1749902 at http://www.wisebread.com Avoid These 5 Common Mistakes While Rebuilding Your Credit http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/avoid-these-5-common-mistakes-while-rebuilding-your-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/holding_credit_cards_79349747.jpg" alt="Learning to avoid common mistakes while rebuilding credit" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know your three-digit credit score is terrible. And this makes it difficult to qualify for auto loans, a mortgage, or credit cards. Even if you do qualify, you're hit with sky-high interest rates.</p> <p>Still, you <em>can&nbsp;</em><a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">rebuild your credit score</a>. It just takes time. Pay your bills on time every month. Pay off as much credit card debt as you can. Eventually, your score will rise.</p> <p>Just avoid these five common mistakes that consumers often make when rebuilding their credit.</p> <h2>1. Closing Paid-Off Credit Cards</h2> <p>Paying off a credit card is cause for celebration. Just don't cancel that card once you hit a zero balance. If you do, your credit score will take a hit. This is because of something called your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">credit-utilization ratio</a>. Basically, your credit score will fall if you use too much of your available credit.</p> <p>Here's an example. Say you have $10,000 worth of credit card debt and three open credit card accounts with a total available credit limit of $15,000. This gives you a credit utilization ratio of 67%. If you pay off one of the cards and bring your debt down to $7,000, your credit utilization ratio falls to 47%. This will boost your credit score. However, if you close that credit card account and lose that available credit (say it was $5,000), your total available credit will drop to $10,000, and your credit utilization ratio jumps to 70%, even higher than when you had $10k of debt but three open accounts.</p> <p>The better move? Keep that paid-off card open, just make sure to avoid running up its balance again.</p> <h2>2. Missing a Payment, Even Once</h2> <p>When rebuilding your credit score, your most important job is to make your monthly payments on time <em>every</em> month. Late or missed payments can send your credit score falling by 100 points. These financial missteps will stay on your credit report for seven years, too.</p> <p>So don't forget to send in that car or credit card payment on time. And if you do miss your due date? Send your payment as quickly as possible. Lenders won't report a payment as missed to the three national credit bureaus until it is 30 days or more past the due date. So even if you missed the official due date, you can still spare your credit score.</p> <h2>3. Swearing Off Credit Cards Forever</h2> <p>It's tempting when you're trying to rebuild your credit to swear off credit cards completely. After all, it's often credit card debt that has gotten consumers into credit score problems. But using a credit card responsibly is actually one way to help improve a credit score. Your score will rise if you pay your credit card bill on time each month. Not using credit cards at all can actually hurt your score.</p> <p>The key, though, is to never charge more than you can afford to pay off in full each month. If you charge too much, you'll simply increase the amount of credit card debt you carry from month to month. This will increase your credit-utilization ratio, thus hurting your score. So do use your card. Just don't use it so much that you have to carry a balance.</p> <p>If you find that you're having trouble getting approved for a credit card because of your bad credit, look for <a href="http://www.wisebread.com/the-5-best-secured-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">secured credit cards</a> which often do not require a credit check.</p> <h2>4. Looking for a Quick Solution</h2> <p>Rebuilding a weak credit score takes time &mdash; lots of it. It might take a year or more of making on-time payments and whittling down your credit card debt to improve your score enough to make you a good risk in the eyes of lenders. Don't make the mistake of trying to rush this process. Many companies claim that they can instantly boost your credit score. Unless there are errors on your credit reports, they can't. There is no quick way to raise an ailing credit score. Any company that tells you otherwise is lying.</p> <h2>5. Not Ordering Your Three Credit Reports</h2> <p>The three national credit bureaus of TransUnion, Equifax, and Experian each maintain a credit report on you. These reports list all the open credit accounts in your name and any missed or late payments in the last seven years. They also list any negative judgments such as foreclosures and bankruptcies in the last seven to 10 years.</p> <p>You are entitled to one free copy of each these reports every year from AnnualCreditReport.com. When rebuilding your credit, it's important to order these reports and to study them. Look for errors. One report might say that you missed a car payment last year that you know you paid on time. Correcting that error could provide an <a href="http://www.wisebread.com/7-ways-to-increase-your-credit-score-quickly?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">immediate boost to your credit score</a>.</p> <p><em>Have you improved your credit? What steps did you take?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">This One Ratio Is the Key to a Good Credit Score</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/building-a-credit-history">Building a Credit History</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-credit-card-truths-you-wish-you-could-tell-your-younger-self">10 Credit Card Truths You Wish You Could Tell Your Younger Self</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-a-solid-credit-score-saves-you-money">How a Solid Credit Score Saves You Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-dont-cut-up-your-credit-cards">Stop! Don&#039;t Cut Up Your Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management credit history credit reports credit score credit utilization ratio debt paying bills rebuilding credit Fri, 08 Jul 2016 10:30:10 +0000 Dan Rafter 1747445 at http://www.wisebread.com 5 Careers That Offer Student Loan Forgiveness http://www.wisebread.com/5-careers-that-offer-student-loan-forgiveness <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-careers-that-offer-student-loan-forgiveness" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_69856403_XLARGE.jpg" alt="looking for a job with student loan forgiveness" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you are like millions of other graduates, you might've experienced sticker shock when you received your first student loan bill after graduation. While taking out a student loan to complete your degree seemed like a good plan at the time, you might be having some regrets when faced with the monthly payments.</p> <p>Thankfully, there are a lot of careers that offer student loan forgiveness. Look into one of these fields to kiss your student debt goodbye.</p> <h2>1. Public Service</h2> <p>Federal Perkins loans can be forgiven if an individual qualifies through full-time employment and has not consolidated their loans. The loan forgiveness is not based on what job you do, but who you work for.<a href="https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service"> Qualifying employers</a> include:</p> <ul> <li>Government organizations at any level (federal, state, local, or tribal);</li> <li>Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code;</li> <li>Full-time positions at AmeriCorps and Peace Corps.</li> </ul> <h2>2. Doctor</h2> <p>It is hard to feel like a successful doctor when the majority of your paycheck goes to your student loan repayment. Thankfully, you can find a list of scholarships and Federal loan forgiveness programs through the&nbsp;<a href="https://services.aamc.org/fed_loan_pub/index.cfm?fuseaction=public.welcome&amp;CFID=1&amp;CFTOKEN=D3ADCE60-B544-6679-82EB218E8D3F6455">Associations of American Medical Colleges</a>.</p> <p>Many of the loan forgiveness programs for doctors require employment in a Health Profession Shortage Areas (HPSA) or a Medically Underserved Area.</p> <p>The&nbsp;<a href="https://www.lrp.nih.gov/">National Institutes of Health (NIH)</a> offers up to $35,000 per year in loan repayment for highly qualified health professionals going into biomedical or biobehavioral research careers.</p> <p>You can also take your stethoscope overseas and qualify for loan forgiveness through the military service. The&nbsp;<a href="http://www.navy.com/careers/healthcare/medicine.html#ft-education-opportunities">Navy Financial Assistance Program</a> offers tuition coverage for current medical students, as well as student loan forgiveness or grants for those with their medical degree.</p> <p>See:&nbsp;<a href="http://www.wisebread.com/8-tax-tricks-to-try-if-youre-stuck-with-student-loans?ref=seealso">8 Tax Tricks to Try if You're Stuck With Student Loans</a></p> <h2>3. Teacher</h2> <p>Teaching is a calling, and many people feel the call to instruct the next generation. So it's only fair that the government helps lighten the debt load of those devoted to teach. Teachers can gain loan forgiveness through the same public service loan forgiveness programs mentioned above.</p> <p>Teachers also can qualify for the Federal Teacher Cancellation for Perkins Loans. For teachers with a Perkins loan, 15% of your loan can be canceled when you teach for one year in a low-income area. If you teach for five years, your full loan will be forgiven.</p> <p>Be sure to check with your state to see what special teacher loan repayment programs there are. Here are just a few:</p> <ul> <li><strong>California:</strong> <a href="http://www.csac.ca.gov/doc.asp?id=111">APLE</a></li> <li><strong>Maine:</strong> <a href="http://www.famemaine.com/files/Pages/education/borrowers/Maine_Loan_Programs.aspx">Educators for Maine</a></li> <li><strong>Iowa:</strong> <a href="http://www.iowacollegeaid.gov/content/iowa-teacher-loan-forgiveness-program">Teach Iowa Scholar Program</a></li> <li><strong>New York:</strong> <a href="http://www.teachnycprograms.net/">Teach NYC </a></li> <li><strong>Texas:</strong> <a href="http://www.hhloans.com/index.cfm?objectid=a85b6795-9731-b000-c93ca1848b604db8">Teach for Texas</a></li> <li><strong>Mississippi:</strong> <a href="http://riseupms.com/state-aid/mtlr/">Mississippi Teacher Loan Repayment Program</a></li> </ul> <h2>4. Lawyer</h2> <p>Tempted by earning big figures down the road, many potential lawyers take on huge amounts of debt to make their career dream come true. Luckily, there are a few student loan forgiveness programs available just for lawyers.</p> <ul> <li><strong>Attorney Student Loan Repayment Program</strong>: In order to retain lawyers in the field, current employees are able to apply for the assistance program. Only certain loans apply, and current employees must have at least $10,000 in federal loan debt to qualify. To see which loans qualify, visit&nbsp;<a href="https://www.justice.gov/oarm/frequently-asked-questions-0#c">Justice.gov</a> for more information.</li> <li><strong>John R. Justice Student Loan Repayment Program</strong>: For lawyers working in the public sector, the&nbsp;<a href="https://www.bja.gov/Funding/JRJStateAgencies.pdf">John R. Justice Student Loan Repayment Program</a> offers $10,000 to $60,000 in loan forgiveness to eligible lawyers working as public defenders.</li> <li><strong>Herbert S. Garten Loan Repayment Assistance Program</strong>: This program awards 70 attorneys up to $5,600 in award money each year for student loan debt. This award comes with more strings than the other two. Eligible candidates must be employed by one of the&nbsp;<a href="http://www.lsc.gov/grants-grantee-resources/our-grantees">program's grantees</a> and have at least $75,000 in outstanding loan debt.</li> </ul> <h2>5. Dentist</h2> <p>Future dentists, here is something to smile about. You can also qualify for loan forgiveness on either the national or state level.</p> <p>National programs include service with the military. The Army offers the&nbsp;<a href="http://www.goarmy.com/amedd/dental/corps_benefits.jsp">Active Duty Health Profession Loan Repayment Program</a> (ADHPLRP) and the Healthcare Professionals Loan Repayment Program (HPLR). The Airforce offers Air Force Active Duty Health Professions Repayment Program (ADHPLRP). All of these programs offer up to $40,000 to $50,000 in debt repayment per year. Research each individual program to know about maximum caps, eligibility criteria, and other benefits.</p> <p>And the&nbsp;<a href="http://www.ada.org/~/media/ADA/Education%20and%20Careers/Files/dental-student-loan-repayment-resource.pdf">American Dental Association</a> has a full list of state-level programs that offer loan forgiveness.</p> <h2>Finding and Qualifying for Student Loan Forgiveness Programs</h2> <p>It's important to note that many of these careers cannot grant student loan forgiveness if your loan does not qualify. This means that if your loan is in default or in a grace period, or you are still attending school, companies may not be able to make qualified loan payments. Also, most student loan forgiveness programs are for federal loans only, and private student loans will not be forgiven. Finally, inquire with your college or university's financial aid department for more available loan forgiveness programs.</p> <p><em>Are you planning on using loan forgiveness for your student loans? Share with us!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/5-careers-that-offer-student-loan-forgiveness">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-ways-youre-being-a-terrible-employee">12 Ways You&#039;re Being a Terrible Employee</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/escape-your-dying-industry-with-one-of-these-8-careers-instead">Escape Your Dying Industry With One of These 8 Careers, Instead</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-reasons-you-are-more-than-your-job">3 Reasons You Are More Than Your Job</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-job-perks-that-can-lead-to-a-dream-career">6 Job Perks That Can Lead to a Dream Career</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-easy-ways-to-avoid-student-loan-debt">12 Easy Ways to Avoid Student Loan Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management career career path job hunting student loan student loan debt student loan forgiveness Thu, 23 Jun 2016 09:00:04 +0000 Ashley Eneriz 1736930 at http://www.wisebread.com How to Escape the Paycheck-to-Paycheck Cycle http://www.wisebread.com/how-to-escape-the-paycheck-to-paycheck-cycle <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-escape-the-paycheck-to-paycheck-cycle" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_80116831_XLARGE.jpg" alt="stop living paycheck to paycheck" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're living paycheck to paycheck, you probably think it's a normal part of life and accept it for what it is. To that, I stick my tongue out and blow. There are plenty of people who've broken free from this rut, but your particular cycle won't break until <em>you </em>break it.</p> <p>Living paycheck to paycheck can mean you're one paycheck away from being without lights, a car, or a home &mdash; and that's just not acceptable. Granted, this is worst-case scenario, but it's a possible scenario. This isn't meant to scare you, of course, but it is meant to build motivation to help you improve your financial outlook and say so long to a house-poor existence. Here's what you need to do to stop living on the edge. (See also: <a href="http://www.wisebread.com/5-ways-to-grow-your-savings-without-a-steady-paycheck?ref=seealso">5 Ways to Grow Your Savings Without a Steady Paycheck</a>)</p> <h2>1. Take Stock of What You're Working With</h2> <p>If you want to stop living paycheck to paycheck, you have to live below your means. It's that simple. Some people are happy just to break even every month, but if you never have extra income, you'll never achieve some of your goals.</p> <p>To stop the cycle, do a financial checkup.</p> <p>Here's a little exercise: Comb through your most recent bank statements, credit card statements, and receipts, and then write down every monthly expense from housing to groceries. Calculate how much you're spending on clothes, miscellaneous items, groceries, fuel, etc.</p> <p>Once you have this figure, compare it with your take-home pay. The amount you're spending every month may be the equivalent of what you bring home, or more than what you bring home. If the latter is the case, it's time to trim.</p> <h2>2. Cut the Fat</h2> <p>Don't listen to anyone who says living paycheck to paycheck is normal. It's not, and whoever says that will probably be sad for the rest of their life. Alas, many people have been conditioned to think this way, and it's this exact thinking that keeps people stuck.</p> <p>There's a better way to live, and it starts with trimming your expenses. At this point, it's not about your wants; you have to focus on your needs and get rid of any unnecessary expenses. What to cut? These extras:</p> <ul> <li>Gym memberships</li> <li>Eating out for lunch</li> <li>Grabbing coffee</li> <li>Spending $50 a week on entertainment</li> <li>Subscription services</li> </ul> <p>These costs don't seem like a lot, but they add up. Getting rid of nonessential expenses can give your budget some wiggle room, creating more disposable income than you thought possible.</p> <h2>3. Stop Being Enslaved to Debt</h2> <p>The more debt you have, the more likely you are to live paycheck to paycheck. This is because debt robs you of extra money. Even if you can't get rid of your house payment, car payment, or student loan debt immediately, you can start chipping away at credit card balances.</p> <p>Take the money you're saving from trimming unnecessary expenses and dump all or a large portion of this cash on your debt. You can tackle your debt with the smallest balance first, or the debt with the highest interest rate first. It doesn't matter which approach you choose, as long as you're paying down balances. The less you owe, the more you can keep. To help you, I've recently written an <a href="http://www.wisebread.com/topic/5-day-debt-reduction-plan">entire five part series on eliminating debt</a>.</p> <h2>4. Pay Yourself &mdash; No Matter What</h2> <p>Once you've got a handle on your debt, it's time to start paying yourself. If you build a cushy savings account, you may never have to borrow money or use a credit card again &mdash; at least not for an emergency or an unexpected expense.</p> <p>Take the money you were putting toward <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt">debt repayment</a> and set up an automatic savings schedule. Each pay period, automatically transfer a specific amount from checking into savings. Schedule this transfer before you pay your bills to ensure you're always paying yourself first.</p> <h2>5. Create Additional Income for Yourself</h2> <p>Sometimes, it isn't enough to trim expenses and pay off debt. You may earn just enough to get by, and despite living simply, you're still trapped in a cycle of living paycheck to paycheck. The truth is, getting ahead may require more income.</p> <p>Now, as a freelancer, I can run down a list of <a href="http://www.wisebread.com/can-you-really-make-a-living-in-the-gig-economy">side hustles to increase your income</a>. This includes moonlighting as a consultant, cutting lawns, buying and selling online, watching pets, renting out extra space in your home, etc. But I also realize that not everyone has the entrepreneurial spirit. But even if you don't want to be your own boss, there are ways to build your income.</p> <p>Depending on your circumstances, a part-time job might fit your schedule perfectly. If you can earn as little as an extra $20 a day, you'll have an extra $400 a month. For example, you can search online for local office-cleaning companies, and call these companies to see if they're looking for part-time help in the evenings. I have a friend who cleans a small office every day after work. It only takes two hours and the cleaning company pays him $20 per cleaning. It's not the most glamorous or high-paying part-time job, but it's easy work and pays okay.</p> <h2>6. Learn How to Say &quot;No&quot;</h2> <p>One of the best ways to improve a budget is to learn how to say no. If you have a large social circle, there's always someone inviting you to a restaurant, a movie, or another event. If you get into a pattern of constantly saying yes and accepting invitations, you could end up broke. You should never sacrifice your bank account at the expense of fun, especially when there are too many ways to enjoy yourself for free. The key is having an airtight entertainment budget. Decide what you can realistically afford to spend on fun, and then stick to this budget. I learned how to say no, and now &quot;No&quot; is my favorite word.</p> <h2>7. Face Reality and Downsize</h2> <p>Making simple adjustments to your budget can improve cash flow tremendously, but not when you're too far in the hole. Accept that you'll have to let go of stuff. Ideally, your house payment should be no more than 28%-30% of your gross income. If you're paying more, you're overspending and it's time to face reality. You're never going to get ahead when you're struggling to keep up with the basics. Downsizing your house can create a smaller house payment, cheaper utilities, and less maintenance. Your finances also may improve if you downsize from an expensive car. You can enjoy a lower car payment and cheaper insurance premiums.</p> <p><em>Are you living paycheck to paycheck? What are you doing to change the situation? Let's discuss in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/how-to-escape-the-paycheck-to-paycheck-cycle">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Best of Personal Finance: Credit Where Credit Is Due Edition</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/johnny-says-read-this-post-and-get-riyyyyyyyyyyatch">Johnny Says: Read This Post and Get Riyyyyyyyyyyatch</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tips-for-increasing-your-financial-literacy">Tips for Increasing Your Financial Literacy</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-audacity-to-waste-money-for-better-finances">The Audacity to Waste Money for Better Finances</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/life-after-debt-whats-next">Life After Debt: What&#039;s Next?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management debt management finances income paycheck paycheck to paycheck payday personal finance Fri, 17 Jun 2016 10:30:04 +0000 Mikey Rox 1732946 at http://www.wisebread.com 5-Day Debt Reduction Plan: Don't Ever Stop http://www.wisebread.com/5-day-debt-reduction-plan-dont-ever-stop <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-day-debt-reduction-plan-dont-ever-stop" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_happy_work_91823869.jpg" alt="Man never stopping with his debt reduction plan" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>[Editor's Note: This is part five of a five-part series on debt reduction. To read more, see the rest of the <a href="http://www.wisebread.com/topic/5-day-debt-reduction-plan">5-Day Debt Reduction Plan</a>.]</p> <p>The harsh truth about debt reduction is that many people don't stick with their plan long enough to see real results. They start off motivated and excited, but they lose steam after a while and never cross the finish line. Paying bills isn't super fun, after all. But if you want to get back in the black, it's important that you think long term without false expectations of overnight success. Luckily, there are plenty of tricks to stay on track, or get back on track if you've lost your way. Here are a few to consider.</p> <p>See also: <a href="http://www.wisebread.com/6-ways-life-is-wonderful-when-youre-debt-free?ref=5dayplan">6 Ways Life Is Wonderful When You're Debt-Free</a></p> <h2>1. Switch Up Your Strategy</h2> <p>As I mentioned in the previous entry of this series, you can pay off balances successfully using the <a href="http://www.wisebread.com/snowballs-or-avalanches-which-debt-reduction-strategy-is-best-for-you?ref=5dayplan">avalanche or snowball debt methods</a> or a combination of both; you have to decide which method works best with your psyche. Just because you start off using one method doesn't mean you can't change it up. If you start the avalanche method and notice your motivation dwindling after a few week or months, give the snowball method a try, or vice versa. It's a matter of trial and error and finding the method that builds momentum.</p> <p>See Also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=5dayplan">Fastest Way to Pay Off $10,000 in Credit Card Debt</a></p> <h2>2. Track Your Progress</h2> <p>It's hard to stay motivated if you don't track your progress. If you're carrying a large amount of debt, it can feel like you're spinning your wheels and getting nowhere. It can take awhile to make a noticeable dent in your balances, and if you don't think you're making progress, you're likely to give up. Although you don't have to obsess about your balances or check statements on a daily basis, it doesn't hurt to recalculate what you owe every couple of months and post your updated balances. Sometimes, we need a visual reminder of our progress to stay motivated.</p> <p>See also: <a href="http://www.wisebread.com/10-smart-ways-to-make-yourself-love-saving-money?ref=5dayplan">10 Smart Ways To Make Yourself Love Saving Money</a></p> <h2>3. Celebrate Milestones &mdash; You Deserve It</h2> <p>Paying off debt is hard work, so it's okay to reward yourself for a job well done. This doesn't suggest going on a small spending spree every time you make a payment, but you can (and should) reward yourself with an inexpensive treat for hitting milestones.</p> <p>&quot;Humans are emotional not logical creatures. Even though logically you don't need to splurge to pay off a debt faster, this small reward triggers the need you have for emotional fulfillment,&quot; says investing blogger Trey Henninger. &quot;It's important to have these small rewards in order to be successful in a hard task like paying off credit card debt.&quot;</p> <p>If you're on a spending freeze and haven't seen a movie outside the house in months, take yourself to a movie after paying off the first $250 of debt, and then plan another low-cost activity after paying off the next $250. Just make sure you pay with cash and not credit; that'll defeat the purpose, and I don't want to come to your house and wag my finger at you.</p> <p>See also: <a href="http://www.wisebread.com/20-free-and-fun-ways-to-reward-yourself?ref=5dayplan">20 Free and Fun Ways to Reward Yourself</a></p> <h2>4. Find an Accountability Partner</h2> <p>Sometimes, we do better when we're accountable to somebody else. Not that you should go around announcing your debt to everyone, but a trusted friend or relative can be the right person to help you stay on track. This person can check in with you from time to time, help you gauge your progress, and offer support when you're on the verge of burnout or resisting an impulse buy.</p> <p>Getting an accountability partner means you'll always have someone in your corner encouraging you. At the same time, stay away from those in your life who <a href="http://www.wisebread.com/is-peer-pressure-keeping-you-poor?ref=5dayplan">encourage or trigger spending</a>. If you have a friend who always wants to shop or go out to dinner, let them know up front that you're on a spending hiatus so they'll give you the space you need to work on your finances. Or, better yet, invite this person to join your debt-eliminating crusade as well; they could probably benefit from it.</p> <p>See also: <a href="http://www.wisebread.com/5-ways-to-dodge-peer-pressure-to-spend">5 Ways to Dodge Peer Pressure to Spend</a></p> <h2>5. Remember Why You're Paying Off Debt</h2> <p>Since it can take months or years to pay off debt, you might forget why you started this journey in the first place. Whenever you feel like giving up, or if you feel that your efforts aren't paying off, think back to the day you decided to work on eliminating your debt. What was your motivation? Did you want to improve your credit so you could buy a house, or were you tired of stressing about high balances? Whatever the reason, focus on the big picture and imagine how amazing your life will be once you are debt-free.</p> <p>See also: <a href="http://www.wisebread.com/the-1-rule-and-other-ways-to-make-goals-manageable?ref=5dayplan">The 1% Rule and Other Ways to Make Goals Manageable</a></p> <h2>The Debt Is Gone &mdash; Now What?</h2> <p>Finally, you've paid off your debt and you can breathe a sigh of relief. It was a rough road and at times you didn't think you would succeed, but you did and it's an indescribable feeling.</p> <p>For the first time you know what it feels like to have no debt and disposable income, and your mind might start thinking of uses for the extra cash. One of the worst things you can do, however, is to take your disposable income and go on spending binges. Yeah, you can have a little fun, but now that your debt has dwindled, it's the perfect opportunity to fix other areas of your personal finance.</p> <p>Building a solid financial foundation isn't only about getting rid of debt. Saving should also be a priority, and now that you're debt-free, you can focus on saving your money.</p> <p>You've already done the hard part, which was to search and destroy unnecessary expenses. Rather than add these expenses back into your budget, take the money you were using for debt repayment and start paying yourself. With an adequate savings, you're less likely to end up in debt again. If you were giving a creditor $300 a month, think of your savings account as another expense and deposit this amount into your account every month.</p> <p>You can slowly build a three to six-month cushion, start a down payment fund for a house, or if you haven't already, open a retirement account or increase your retirement contributions. Whatever you do, never stop saving.</p> <p>See also: <a href="http://www.wisebread.com/5-ways-to-make-yourself-accountable?ref=5dayplan">5 Ways to Make Yourself Accountable</a></p> <h2>Bottom Line</h2> <p>Bad debt can rob you blind. It can take your joy, your motivation, and your options. But once you start on the path to being debt-free, the dark cloud hanging over you becomes lighter and lighter. You can fight back against debt, but you have to take it one small step at a time.</p> <h2>Debt Management Resources</h2> <ul> <li><a href="http://www.wisebread.com/how-to-manage-your-debt-in-10-minutes-a-week?ref=5dayplan">How to Manage Your Debt in 10 Minutes a Week</a></li> <li><a href="http://www.wisebread.com/5-debt-management-questions-youre-too-embarrassed-to-ask?ref=5dayplan">5 Debt Management Questions You're Too Embarrassed to Ask</a></li> <li><a href="http://www.wisebread.com/6-free-debt-management-tools?ref=5dayplan">6 Free Debt Management Tools</a></li> <li><a href="http://www.wisebread.com/12-reasons-your-debt-isnt-diminishing?ref=5dayplan">12 Reasons Your Debt Isn't Diminishing</a></li> <li><a href="http://www.wisebread.com/8-debt-reduction-mistakes-even-smart-people-make?ref=5dayplan">8 Debt Reduction Mistakes Even Smart People Make</a></li> <li><a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt?ref=5dayplan">Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?</a></li> <li><a href="http://www.wisebread.com/6-common-debt-reduction-roadblocks-and-how-to-beat-them?ref=5dayplan">6 Common Debt Reduction Roadblocks -- And How to Beat Them</a></li> <li><a href="http://www.wisebread.com/six-steps-to-eliminating-your-debt-painlessly?ref=5dayplan">6 Steps to Eliminating Your Debt Painlessly</a></li> <li><a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt?ref=5dayplan">8 Organizations That REALLY Can Help You With Your Debt</a></li> <li><a href="http://www.wisebread.com/should-you-sell-your-home-to-pay-down-debt?ref=5dayplan">Should You Sell Your Home to Pay Down Debt?</a></li> <li><a href="http://www.wisebread.com/taming-your-debt-aggressive-repayment-strategies?ref=5dayplan">Taming Your Debt: Aggressive Repayment Strategies</a></li> <li><a href="http://www.wisebread.com/the-7-best-credit-card-debt-elimination-strategies?ref=5dayplan">7 Best Credit Card Debt Elimination Strategies</a></li> </ul> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/5-day-debt-reduction-plan-dont-ever-stop">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up">5-Day Debt Reduction Plan: Add It Up</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-search-and-destroy">5-Day Debt Reduction Plan: Search and Destroy</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-debt-reduction-mistakes-even-smart-people-make">8 Debt Reduction Mistakes Even Smart People Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/try-these-6-money-saving-challenges-now">Try These 6 Money-Saving Challenges Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Debt Management 5 day debt reduction plan accountability expenses progress repayment plan saving money strategy tracking Fri, 10 Jun 2016 10:30:11 +0000 Mikey Rox 1727862 at http://www.wisebread.com 5-Day Debt Reduction Plan: Pay It Off http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-day-debt-reduction-plan-pay-it-off" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_creative_artist_94781499.jpg" alt="Woman paying off debt as part of debt reduction plan" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>[Editor's Note: This is part four of a five-part series on debt reduction. To read more, see the rest of the <a href="http://www.wisebread.com/topic/5-day-debt-reduction-plan">5-Day Debt Reduction Plan</a>.]</p> <p>You've combed through your budget and you've found extra money to direct toward debt repayment &mdash; which means the time has finally arrived to pay it off.</p> <p>Getting rid of debt isn't only about improving your budget and having the right tools &mdash; you also need the right strategy to succeed. Although there isn't necessarily a &quot;best&quot; way to pay off debt, some strategies can get you to the finish line quicker. You need to understand different pay off methods and do what works best for you.</p> <p>See Also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=5dayplan">Fastest Way to Pay Off $10,000 in Credit Card Debt</a></p> <p>There are two popular ways to attack your credit card debt. The first is to pay the minimum on each card except the card with the <em>smallest balance</em>. That card you'll throw all the money you can at it. This is called the Snowball method.</p> <p>The other method is to pay the minimum on each card except the card with the <em>highest interest rate</em>. You'd put in all the money you can into that card. This is called the Avalanche method. Which one is best for you depends on your personality.</p> <p>See also: <a href="http://www.wisebread.com/the-simple-way-to-decide-which-credit-card-to-pay-off-first?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=5dayplan">The Simple Way to Decide Which Credit Card to Pay Off First </a></p> <p>Here are the details of the debt example we're using in this series:</p> <p>&nbsp;<img width="605" height="298" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-06-08%20at%2011.47.55%20AM.png" /></p> <h2>Debt Avalanche</h2> <p>There are two factors to consider when paying off debt: the amount you owe and your interest rate. When you <em>avalanche </em>your debt, you focus on paying off the debt with the highest interest rate first, regardless of the balance. This approach prioritizes debt according to costs. The higher your interest rate, the more it'll cost to carry the balance. So the idea is to get rid of your most expensive debt as early as possible.</p> <p>If you've been following this series, you've (hopefully) already written down your debts including amounts and interest rates. The next step is taking your &quot;found&quot; money and making higher payments on the debt with the highest rate, while only making minimum payments on your other debts. Once you've paid off this debt, move on to the balance with the next highest interest rate and continue the cycle until you're debt-free.</p> <p>Using the debts in the example from <a target="_blank" href="http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up?ref=5dayplan">Day 2</a>, you'd target Credit Card #3 first, then Credit Card #2 and so on until Credit Card #1 is paid off.</p> <p><strong>Total Debt</strong>: $10,000</p> <p><strong>Monthly Payment</strong>: $200 minimum + $300 &quot;found&quot; money = $500</p> <p><strong>Months to Payoff</strong>: 25</p> <p><strong>Interest Paid</strong>: $1,811</p> <p>This method will result in you paying the least amount of interest possible.</p> <h2>Debt Snowball</h2> <p>This method is similar to the Avalanche, but instead of concentrating your efforts on the debt with the highest interest rate, you focus on the debt with the smallest <em>balance</em>. You'll make higher payments on this debt and minimum payments on all other debts. And once you've paid off this balance, you'll funnel the money to the debt with the next smallest balance, and so on. Using the debts in our list, you'd start at Credit Card #4, move to Credit Card #1, and so on until you paid off Credit Card #3.</p> <p><strong>Total Debt</strong>: $10,000</p> <p><strong>Monthly Payment</strong>: $200 minimum + $300 &quot;found&quot; money = $500</p> <p><strong>Months to Payoff</strong>: 26</p> <p><strong>Interest Paid</strong>: $2,092</p> <p>Although the Snowball takes a month longer than the Avalanche &mdash; and costs more in interest &mdash; it's still very popular. The Snowball lets you tackle easy balances first, and you see results of your efforts right away, which can give a psychological push to continue on the path. Even that small amount of encouragement will help you stay the course over the long term.</p> <h3>A Simple Debt Repayment Calculator to Try</h3> <p>You can use the same <a href="https://www.calcxml.com/calculators/restructuring-debt">debt repayment calculator</a> we used to crunch your own numbers and compare strategies. You'll find a payment plan, too, that tells you how much to send to each creditor every month of the plan until it is paid off. How easy is that?</p> <h2>Debt Repayment Tactics That Work</h2> <p>Whichever method you choose, remember that debt repayment isn't easy. But don't give up. I never promised this would be a walk in the park, but there are several tactics to keep you on the right track.</p> <h3>1. Don't Forget Your Budget</h3> <p>Finding extra money for repayment required revamping your budget and coming up with a monthly spending plan that prioritized expenses. For any repayment plan to work, you have to remember and stick with your budget, or else you'll revert to bad habits. Don't forget to revisit your budget every week and look back month-to-month to track your income and spending. You don't want frivolous spending to creep back into the picture and throw you off track.</p> <h3>2. Make a Payment Every Two Weeks</h3> <p>Some creditors accept partial payments and allow customers to make more than one payment a month. Rather than make one monthly payment, break up the payment over two weeks. Since credit cards typically charge interest on a daily basis, the sooner you get a payment to your creditors, the less interest you pay. Also, making bi-weekly payments allows you to get in one extra month of payment each year (you'll make 26 payments, the equivalent of 13 months). This is an important tip to remember! If you owe $3,000 on a credit card with an interest rate of 16% and you make a $100 payment each month, you can save $100 and pay off the balance four months sooner by switching from a monthly payment to a bi-weekly payment.</p> <h3>3. Redirect Money From &quot;Almost&quot; Impulse Buys</h3> <p>You're only human, so yeah, at times you'll be tempted to make an impulse buy. Like all vices, you have to learn ways to overcome these urges.</p> <p>&quot;If you feel the urge to buy a new pair of shoes or sunglasses, take a quick peek at your credit card debt by viewing your mobile app,&quot; recommends consumer and money-saving expert Andrea Woroch. &quot;This will remind you of your debt-free goals and every time you seriously avoid an impulse purchase, make a payment in the amount that you would've used on that item.&quot;</p> <h3>4. Implement a Spending Freeze</h3> <p>A spending freeze can jump-start debt elimination, and it doesn't have to be for an extended period. If you can't handle a six or 12-month freeze, shoot for one to three months. For this to work, you must commit to only buying necessities &mdash; no matter what. This means no eating out, no movies, no coffee runs, no hair and nail services, no eBay shopping, no extras of any kind. A spending freeze doesn't mean you can't have fun, but you'll have to get creative and look for ways to entertainment yourself for free. Keep track of how much you're saving and put this money toward debt. Always remember to &quot;bank your savings!&quot;</p> <h3>5. Automate Your Payments</h3> <p>If you don't think you're disciplined enough to increase monthly debt payments on your own, automate your finances. You can set up automatic payments between your creditor and bank. You choose the payment amount and the payment date. All you have to do is make sure there's enough funds in your account.</p> <h3>6. Inquire About a Cheaper Interest Rate</h3> <p>Remember when your mom told you that &quot;You'll never know unless you ask?&quot; Well, she was right (again!), and getting a cheaper credit card rate is often a matter of asking for it. Your creditors may not voluntarily lower your rate, but they might cut you some slack if you request one, especially if you have a good payment history and threaten to take your business elsewhere. If your credit card company won't budge on your rate, you can apply for another <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=5dayplan">credit card with a lower APR</a> and move your balance from a high-rate card to a low-rate credit card. You also can look into refinancing loans to see if you qualify for a lower interest rate. A lower rate reduces your monthly payment, but if you want to chip away at your debt faster, continue making the original payment.</p> <h3>7. Do a Balance Transfer</h3> <p>If you can commit to a certain repayment budget, you can look into getting a new credit card with a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=5dayplan">0% APR for balance transfers</a> promotion. How this works is simple: transfer your existing debt from your old cards to your new one. During the promotional time period, you are charged <strong>zero interest</strong>.</p> <p>For example, the <a href="http://www.wisebread.com/chase-slate-visa-review?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=5dayplan">Chase Slate card</a> (our favorite for balance transfers) offers 15 months of 0% intro APR on balance transfers. Let's say you transfer $10,000 to your new Slate card. (Most cards will charge a balance transfer fee between 3%-5% but Slate charges <strong>no intro fee</strong> for balance transfers made within the first 60 days of account opening.) After 15 months of $500 payments, your balance will be a mere $2500. After that, the interest rate kicks in (for Slate, it's a variable 13.24%-23.24%). At 13% interest, you'll pay off the rest of the balance in 6 months with $85 in interest. That means instead of 25-26 months and $2,000 in interest, the balance transfer option saved you $1,900 in interest and you're debt free four to five months earlier!</p> <p>There are several things to <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=5dayplan">consider when doing a balance transfer</a>. The most important thing is that you don't deviate from your repayment budget just because you're no longer paying interest.</p> <p>See also: <a href="http://www.wisebread.com/7-important-things-you-should-know-about-balance-transfer-cards?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=5dayplan">7 Important Things You Should Know About Balance Transfer Credit Cards</a></p> <p>Debt repayment is a process, but you'll finish strong as long as you keep your eye on the prize and remain on the right path. I'll share some tips about that &mdash; and what comes after you've eliminated your debt in the final installment of the series.</p> <h2>Debt Management Resources</h2> <ul> <li><a href="http://www.wisebread.com/how-to-manage-your-debt-in-10-minutes-a-week?ref=5dayplan">How to Manage Your Debt in 10 Minutes a Week</a></li> <li><a href="http://www.wisebread.com/5-debt-management-questions-youre-too-embarrassed-to-ask?ref=5dayplan">5 Debt Management Questions You're Too Embarrassed to Ask</a></li> <li><a href="http://www.wisebread.com/6-free-debt-management-tools?ref=5dayplan">6 Free Debt Management Tools</a></li> <li><a href="http://www.wisebread.com/12-reasons-your-debt-isnt-diminishing?ref=5dayplan">12 Reasons Your Debt Isn't Diminishing</a></li> <li><a href="http://www.wisebread.com/8-debt-reduction-mistakes-even-smart-people-make?ref=5dayplan">8 Debt Reduction Mistakes Even Smart People Make</a></li> <li><a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt?ref=5dayplan">Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?</a></li> <li><a href="http://www.wisebread.com/6-common-debt-reduction-roadblocks-and-how-to-beat-them?ref=5dayplan">6 Common Debt Reduction Roadblocks -- And How to Beat Them</a></li> <li><a href="http://www.wisebread.com/six-steps-to-eliminating-your-debt-painlessly?ref=5dayplan">6 Steps to Eliminating Your Debt Painlessly</a></li> <li><a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt?ref=5dayplan">8 Organizations That REALLY Can Help You With Your Debt</a></li> <li><a href="http://www.wisebread.com/should-you-sell-your-home-to-pay-down-debt?ref=5dayplan">Should You Sell Your Home to Pay Down Debt?</a></li> <li><a href="http://www.wisebread.com/taming-your-debt-aggressive-repayment-strategies?ref=5dayplan">Taming Your Debt: Aggressive Repayment Strategies</a></li> <li><a href="http://www.wisebread.com/the-7-best-credit-card-debt-elimination-strategies?ref=5dayplan">7 Best Credit Card Debt Elimination Strategies</a></li> </ul> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-dont-ever-stop">5-Day Debt Reduction Plan: Don&#039;t Ever Stop</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-simple-way-to-decide-which-credit-card-to-pay-off-first">The Simple Way to Decide Which Credit Card to Pay Off First</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up">5-Day Debt Reduction Plan: Add It Up</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-search-and-destroy">5-Day Debt Reduction Plan: Search and Destroy</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-debt-reduction-mistakes-even-smart-people-make">8 Debt Reduction Mistakes Even Smart People Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Credit Cards Debt Management 5 day debt reduction plan avalanche method expenses repayment plan saving money snowball method spending freeze strategies Thu, 09 Jun 2016 10:30:06 +0000 Mikey Rox 1727206 at http://www.wisebread.com 5-Day Debt Reduction Plan: Search and Destroy http://www.wisebread.com/5-day-debt-reduction-plan-search-and-destroy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-day-debt-reduction-plan-search-and-destroy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_piggy_bank_52822932.jpg" alt="Woman searching and destroying her current debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>[Editor's Note: This is part three of a five-part series on debt reduction. To read more, see the rest of the <a href="http://www.wisebread.com/topic/5-day-debt-reduction-plan">5-Day Debt Reduction Plan</a>.]</p> <p>Some people give up on the idea of paying off debt because they think they don't earn enough money. Yes, life can be expensive, especially when wages don't keep pace with the cost of living. We're all victims of the tough economy, but this doesn't mean we can't win the war against consumer debt.</p> <p>If you talk with anyone who's <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=5dayplan">successfully paid off debt</a>, you'll likely notice a common thread: Commitment. While these folks may not be rich or have a ton of money, what they do have is an air-tight spending plan, and they know exactly where their money is going.</p> <h2>You Need a Budget</h2> <p>To get a handle on debt, you first have to get a handle on your budget and monitor your spending. Like adding up your debt, you'll need to write it all down rather than relying on your own estimates. There's a good chance that you're spending more than you think you are in many categories. In fact, &quot;financial advisers who press clients to tally their spending say the numbers are often at least 20% higher than the individuals had thought,&quot; according to the Wall Street Journal.</p> <p>Coming up with a <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps?ref=5dayplan">budget isn't hard</a>. It's simply a matter of identifying your fixed and variable expenses. The good news is that with modern technology, you don't have to budget the old-fashioned way with a pen and paper. There are plenty of apps and software programs that simplify budgeting, and many are free to download. For example:</p> <ul> <li>Mint</li> <li>Pocket Guard</li> <li>Good Budget</li> <li>Mvelopes</li> <li>Home Budget</li> <li>Level Money</li> <li>Spendee</li> <li>...and many more, including a simple spreadsheet.</li> </ul> <p>See also: <a href="http://www.wisebread.com/10-sites-and-apps-to-help-you-track-your-spending-and-stick-to-your-budget?ref=5dayplan">10 Sites and Apps to Help You Track Your Spending and Stick to Your Budget</a></p> <p>These apps are effective because they allow you track income and expenses, and you're able to see what you're spending on a daily, weekly, or monthly basis. Some budgeting apps also include pie charts and graphs so you know the percentage of your income that's spent in different categories. When you see where your money goes, it's easier to identify areas where you need to cut back.</p> <h2>Tracking Your Expenses</h2> <p>It can be hard to account for every cent when you first begin, but if you're following along with the series, on Day Two you collected all of your recent credit card statements, which is a good place to start. If you're at a loss for spending details, go ahead and make estimates now, and create a <a href="http://www.wisebread.com/start-saving-more-with-this-one-simple-tool?ref=5dayplan">spending book</a> and track every penny you spend (every one!) for a month. You can update the estimates you make today afterward.</p> <p>Group your expenses into two categories: Fixed and Variable. Fixed means you can't change it (immediately). For example, these might include your mortgage, car payments, and insurance. The other expenses are variable, which means that you can adjust them easily, for example groceries, dining, and even subscriptions like Hulu or Netflix (you can cancel them or lower the subscription level at any time).</p> <p>If you're overspending on a fixed monthly expense like a house or car, you can't get rid of those expenses overnight. But depending on how much debt you're in, how quickly you want to get out of it, and whether you've suddenly realized you've been living outside of your means, you should <a href="http://www.wisebread.com/this-is-how-you-downsize-your-home-and-start-living-a-better-life?ref=5dayplan">consider downsizing</a> or even <a href="http://www.wisebread.com/10-of-americas-awesomest-cheap-cities">moving to a different city</a>.</p> <p>See also: <a href="http://www.wisebread.com/10-big-expenses-you-can-easily-get-rid-of?ref=5dayplan">10 Big Expenses You Can Easily Get Rid Of</a></p> <p>But in the meantime, take a hard look at your variable expenses and start cutting.</p> <h2>Keep Your Goals Attainable</h2> <p>As we saw in <a href="http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up?ref=5dayplan">Day 2: Add It Up</a>, if you want to get rid of your $10,000 in credit card debt in two years, you'll need to allocate $500 per month toward debt repayment. If you're currently paying $200 a month, rework your budget to free up an additional $300 every month. This breaks down to about $75 per week.</p> <p>See also: <a href="http://www.wisebread.com/101-ways-to-save-money-around-the-house?ref=5dayplan">101 Ways to Save Money Around the House</a></p> <p>Here are some ideas about how you can drum up that extra cash.</p> <ul> <li><strong>Reduce your weekly grocery budget</strong>. You can save money by skipping the brand names and buying generic and by planning meals based on the weekly sales. Use a <a href="http://www.wisebread.com/the-best-5-credit-cards-for-groceries?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=5dayplan">credit card that offers rewards for groceries</a> and always bring a list and stick to it!</li> </ul> <p>See also: <a href="http://www.wisebread.com/save-100s-next-month-with-these-10-grocery-shopping-tips?ref=5dayplan">Save $100 Next Month with These Grocery Shopping Tips</a></p> <ul> <li><strong>Cut back on entertainment</strong>. If you're currently spending $40 a week on entertainment, which might include movies, dinner, and drinks with friends, scale back to $30 a week. Something as simple as <a href="http://www.wisebread.com/how-water-can-save-you-977-a-year?ref=5dayplan">ordering water</a> instead of a soda or iced tea can save you $5-$10 each week.</li> </ul> <p>See also: <a href="http://www.wisebread.com/tips-for-eating-out-cheaply?ref=5dayplan">Tips for Eating Out Cheaply</a></p> <ul> <li><strong>Travel mug and brown bag it</strong>. So what if you have to <a href="http://www.wisebread.com/heres-how-rich-youd-be-if-you-stopped-drinking-expensive-coffee">brew your own coffee</a> or <a href="http://www.wisebread.com/are-you-wasting-300000-on-lunch?ref=5dayplan">brown bag your lunch</a>? You'll be glad you made the sacrifice as your debt starts to disappear.</li> </ul> <p>See also: <a href="http://www.wisebread.com/9-ways-to-save-money-on-your-cup-of-coffee?ref=5dayplan">9 Ways to Save Money on Your Cup of Coffee</a></p> <ul> <li><strong>Cut your home entertainment spend</strong>. Instead of subscribing to Netflix <em>and </em>Hulu, pick one and cancel the other. Or keep both streaming services and get rid of cable.</li> </ul> <p>See also: <a href="http://www.wisebread.com/how-everyone-can-cut-cable-and-still-watch-what-they-love-even-sportsfans?ref=5dayplan">How to Cut Cable and Still Watch What You Love</a></p> <ul> <li><strong>Cancel your gym membership</strong>. Instead, <a href="http://www.wisebread.com/10-clever-ways-to-improve-your-home-gym?ref=5dayplan">work out at home</a> or at the park, or join a nearby recreation center, like the YMCA.</li> </ul> <p>See also: <a href="http://www.wisebread.com/12-cheap-home-workout-hacks-for-people-with-no-equipment-and-no-room?ref=5dayplan">12 Cheap Home Workout Hacks for People with No Equipment and No Room</a></p> <ul> <li><strong>Cut car expenses</strong>. Carpool, walk, or bike to work a few days each week to save on gas and reduce your transportation costs. I did this for a couple years with a buddy and it saved us both thousands of dollars.</li> </ul> <p>See also: <a href="http://www.wisebread.com/5-simple-ways-to-cut-your-car-expenses?ref=5dayplan">5 Simple Ways to Cut Your Car Expenses</a></p> <ul> <li><strong>Shop around for cheaper insurance</strong>. If you don't drive often, ask your provider about a low-mileage discount. You can also save by bundling insurances with the same company.</li> </ul> <p>See also: <a href="http://www.wisebread.com/4-tips-to-save-on-car-insurance?ref=5dayplan">4 Tips to Save on Car Insurance</a></p> <ul> <li><strong>Become an avid DIYer</strong>. Stop paying for stuff you can do yourself, such as washing your car, cutting your grass, and cleaning your house</li> </ul> <p>See also: <a href="http://www.wisebread.com/5-household-fixes-you-should-stop-paying-others-for?ref=5dayplan">5 Household Fixes You Should Stop Paying Others For</a></p> <p>As you can see, improving your cashflow isn't hard or impossible, but it does require action. If you can cut $10, $20, or even $30 here and there, the <a href="http://www.wisebread.com/16-easy-ways-to-save-100-this-month?ref=5dayplan">savings can add up to hundreds</a> every month. Once you have a solid savings plan in place, you can finally begin redirecting found dollars toward debt repayment.</p> <h2>Increase Your Income</h2> <p>The other part of your budget includes the money you have coming in. The more you make, the more you can allocate to your debt reduction. Often it's easier to get a side gig to get the extra money than to cut costs. Here are ways you can increase your income (make sure you're putting in all that extra money into your credit card payments!).</p> <ul> <li><strong>Ask for a raise.</strong> Consider whether it's an appropriate time to ask for a raise. Has the company been doing well? Have you been with the company for a while and have gotten positive feedback regarding your performance? Don't be shy. The worse that can happen is your boss will say &quot;no.&quot;</li> </ul> <p>See also: <a href="http://www.wisebread.com/5-times-you-should-demand-a-raise?ref=5dayplan">5 Times You Should Demand a Raise</a></p> <ul> <li><strong>Get a side job.</strong> There's a whole <a href="http://www.wisebread.com/13-ways-to-make-money-online-that-arent-scams?ref=5dayplan">online gig economy</a> out there. Find something you can do. Do it.</li> </ul> <p>See also: <a href="http://www.wisebread.com/15-ways-to-make-money-outside-your-day-job?ref=5dayplan">15 Ways to Make Money Outside Your Day Job</a></p> <ul> <li><strong>Sell your stuff.</strong> We all have things sitting in our garage or the back of the closet that haven't seen the light of day in years. Go through them and see what you can sell. Better yet, if you're crafty, start <a href="http://www.wisebread.com/the-5-best-sites-to-sell-your-arts-and-crafts?ref=5dayplan">making stuff to sell</a>.</li> </ul> <p>See also: <a href="http://www.wisebread.com/clear-out-that-clutter-15-places-to-sell-your-stuff?ref=5dayplan">15 Places to Sell Your Stuff</a></p> <ul> <li><strong>Sell your services.</strong> Think about your skillset and consider whether <a href="http://www.wisebread.com/make-your-hobby-pay-its-way?ref=5dayplan">others may find it valuable</a>. Find places to showcase your skills and get some exposure.</li> </ul> <p>See also: <a href="http://www.wisebread.com/10-awesome-money-making-hobbies?ref=5dayplan">10 Awesome Money-Making Hobbies</a></p> <ul> <li><strong>Be a host.</strong> You don't have to have multiple homes lying around to make money <a href="http://www.wisebread.com/turn-your-home-into-a-rental-in-9-easy-steps?ref=5dayplan">renting out your property</a>. You can rent out a room, a couch, even a parking space. You can also host a foreign exchange student.</li> </ul> <p>See also: <a href="http://www.wisebread.com/turn-your-home-into-a-rental-in-9-easy-steps?ref=5dayplan">11 Best Sites for Renting Your Extra Space</a></p> <ul> <li><strong>Be creative.</strong> You don't have to have a lot of extra time or fancy skills to make some extra cash. Take <a href="http://www.wisebread.com/what-pays-more-online-surveys-or-the-gig-economy?ref=5dayplan">online surveys</a> or spend a few hours a week on <a href="http://www.wisebread.com/find-a-side-gig-at-these-4-best-micro-jobs-sites?ref=5dayplan">micro job sites</a>. Look around for opportunities.</li> </ul> <p>See also: <a href="http://www.wisebread.com/9-ways-to-earn-extra-cash-when-money-is-tight?ref=5dayplan">9 Creative Ways to Earn Extra Cash When Money Is Tight</a></p> <p>In part four, I'll discuss some strategies that will make the most of your hard-earned money and get you to financial independence faster.</p> <h2>Debt Management Resources</h2> <ul> <li><a href="http://www.wisebread.com/how-to-manage-your-debt-in-10-minutes-a-week?ref=5dayplan">How to Manage Your Debt in 10 Minutes a Week</a></li> <li><a href="http://www.wisebread.com/5-debt-management-questions-youre-too-embarrassed-to-ask?ref=5dayplan">5 Debt Management Questions You're Too Embarrassed to Ask</a></li> <li><a href="http://www.wisebread.com/6-free-debt-management-tools?ref=5dayplan">6 Free Debt Management Tools</a></li> <li><a href="http://www.wisebread.com/12-reasons-your-debt-isnt-diminishing?ref=5dayplan">12 Reasons Your Debt Isn't Diminishing</a></li> <li><a href="http://www.wisebread.com/8-debt-reduction-mistakes-even-smart-people-make?ref=5dayplan">8 Debt Reduction Mistakes Even Smart People Make</a></li> <li><a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt?ref=5dayplan">Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?</a></li> <li><a href="http://www.wisebread.com/6-common-debt-reduction-roadblocks-and-how-to-beat-them?ref=5dayplan">6 Common Debt Reduction Roadblocks -- And How to Beat Them</a></li> <li><a href="http://www.wisebread.com/six-steps-to-eliminating-your-debt-painlessly?ref=5dayplan">6 Steps to Eliminating Your Debt Painlessly</a></li> <li><a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt?ref=5dayplan">8 Organizations That REALLY Can Help You With Your Debt</a></li> <li><a href="http://www.wisebread.com/should-you-sell-your-home-to-pay-down-debt?ref=5dayplan">Should You Sell Your Home to Pay Down Debt?</a></li> <li><a href="http://www.wisebread.com/taming-your-debt-aggressive-repayment-strategies?ref=5dayplan">Taming Your Debt: Aggressive Repayment Strategies</a></li> <li><a href="http://www.wisebread.com/the-7-best-credit-card-debt-elimination-strategies?ref=5dayplan">7 Best Credit Card Debt Elimination Strategies</a></li> </ul> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/5-day-debt-reduction-plan-search-and-destroy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up">5-Day Debt Reduction Plan: Add It Up</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-dont-ever-stop">5-Day Debt Reduction Plan: Don&#039;t Ever Stop</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beyond-debt-free-getting-by-in-the-new-economy">Beyond Debt-Free: Getting By in the New Economy</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Debt Management 5 day debt reduction plan apps cutting expenses payoff plans spending book Wed, 08 Jun 2016 10:30:07 +0000 Mikey Rox 1726483 at http://www.wisebread.com 5-Day Debt Reduction Plan: Add It Up http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-day-debt-reduction-plan-add-it-up" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_bills_calculator_64784797.jpg" alt="Man adding up his debt during debt reduction plan" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>[Editor's Note: This is part two of our five-part series on debt reduction. To read more, see the rest of the <a href="http://www.wisebread.com/topic/5-day-debt-reduction-plan">5-Day Debt Reduction Plan</a>.]</p> <p>Excuses and bad habits might have stopped you from <a href="http://www.wisebread.com/5-day-debt-reduction-plan-stop-waiting-for-tomorrow?ref=5dayplan">achieving financial success</a> in the past, but now that you're ready to tackle debt like a boss, it's time to get down to business. Paying off debt is hard work. In fact, it's probably one of the hardest financial challenges you'll take on, aside from actually making the money you'll need to pay it off. Considering that then, you won't get far without provisions in place.</p> <p>See also: <a href="http://www.wisebread.com/5-steps-toward-financial-independence?ref=5dayplan">5 Steps Toward Financial Independence</a></p> <p>To get to the finish line &mdash; or even come close to it &mdash; you'll need a certain amount of courage to attack your debt head on. It's a frightening prospect, for sure, and maybe you've tricked yourself into believing your debt problem isn't that bad. While this mindset might help you sleep better at night, it doesn't reduce balances. So before you can move forward in this process, you have to add up what you owe. Chances are, the final number will be a scary one.</p> <h2>1. Decide Which Debts to Include in Your Payoff Plan</h2> <p>Some people come up with a plan to pay off <em>all </em>of their debt, including student loans, auto loans, and mortgages, whereas others focus on unsecured debts like credit cards and personal loans. All debt isn't created equal. We're focusing this plan on credit card debt which can have more of a <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score?ref=5dayplan">negative impact on credit scores</a> and usually comes with higher, often much higher, interest rates.</p> <h2>2. Take a Few Minutes to Gather Your Statements</h2> <p>Since you're adding up what you owe, create a simple spreadsheet to record this information. It's important to get everything down. Some people have no idea of how much they owe. They might have an estimated number in their head, but it's not until they see their debt on paper that they're able to grasp the severity of a situation &mdash; and subsequently reach for a solution (or a drink).</p> <h2>3. Next, List All Your Debts</h2> <p>Include detailed information about your debt, such as your current balances for each account, minimum monthly payments, and interest rates.</p> <p>Your spreadsheet might look something like this:</p> <p>&nbsp;<img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-06-06%20at%201.56.13%20PM.png" width="605" height="299" alt="" /></p> <p>After writing down your debts, calculate the total balance and total minimum payment due. You'll see how much you owe down to the cent, as well as how much you're currently paying in minimum payments each month.</p> <h2>The Cost of Minimum Payments</h2> <p>Debt elimination works best when you <a href="http://www.wisebread.com/the-1-rule-and-other-ways-to-make-goals-manageable?ref=5dayplan">set attainable goals</a> for yourself. I've harped on this practice in plenty of my Wise Bread posts before and I can't stress the importance of goal setting enough. It isn't enough to know your numbers; you need a plan that allows you to pay down balances sooner rather than later, or else you could carry debt for decades and pay thousands of dollars in interest. You also need to do it in a reasonable way so you'll stay on track.</p> <p>At $10,000, your total minimum payments due is $200 (credit cards usually charge between 1%-3% of the balance due as their monthly minimum payment). The following month, your minimum payment due will be lower, because your balance is (slightly) lower. But if you follow this course and only make the minimum due each month, it will take you <strong>50 years</strong> to pay that off, along with paying over $28,000 in interest. I'm sure you don't want to hold on to that debt for decades, nor pay tens of thousands in interest.</p> <p>If however, you kept your monthly payments at $200, you'd be debt free in eight years, and the interest you'd have paid would be $8,916. See the difference?</p> <p>See also: <a href="http://www.wisebread.com/when-to-do-a-balance-transfer-to-pay-off-credit-card-debt?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=5dayplan">Stop Paying Credit Card Interest with a Balance Transfer</a></p> <h2>Set Achievable Goals</h2> <p>Understandably, you want the balance gone within the next few weeks or months. But you have to be realistic. Unless you strike gold or get a windfall (or start being really <em>really</em> nice to the old rich person down the street), you probably won't be able to pay off $10,000 in credit card debt in three months. But you definitely can punch those numbers and get out of debt in less than eight years.</p> <p>See Also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=5dayplan">Fastest Way to Pay Off $10,000 in Credit Card Debt</a></p> <p>Let's say that you are able to find an extra $300 a month in your budget to steer toward debt reduction, bringing your total debt payment to $500 per month (your current minimum due plus $300). Without interest to pay, you'd knock this down in just 20 months! Unfortunately, you actually do have to pay interest until your debt is cleared.</p> <p>The average interest rate on your $10,000 is a whopping 17.88%. (Ouch!) That means it'll actually take you two years and almost $2,000 in interest, (still a huge improvement over the eight years and almost $9,000 in interest if you just paid $200 per month).</p> <p>Every little bit you can add to your monthly debt reduction budget helps. For example, if you can increase your monthly payment by just another $50, your debt is gone in 22 months, and you'll have paid $1,600 in interest.</p> <p>The key to remember is that small amounts really do add up over time. The more of those small amounts you can find and put to work for you, the faster you will be able to eliminate your credit card balances. You won't get out of debt without making some sacrifices, however. Which leads us to the next step in this series: How to search for unnecessary costs and destroy these to improve your cashflow and free up more of your money to retire debt.</p> <h2>Debt Management Resources</h2> <ul> <li><a href="http://www.wisebread.com/how-to-manage-your-debt-in-10-minutes-a-week?ref=5dayplan">How to Manage Your Debt in 10 Minutes a Week</a></li> <li><a href="http://www.wisebread.com/5-debt-management-questions-youre-too-embarrassed-to-ask?ref=5dayplan">5 Debt Management Questions You're Too Embarrassed to Ask</a></li> <li><a href="http://www.wisebread.com/6-free-debt-management-tools?ref=5dayplan">6 Free Debt Management Tools</a></li> <li><a href="http://www.wisebread.com/12-reasons-your-debt-isnt-diminishing?ref=5dayplan">12 Reasons Your Debt Isn't Diminishing</a></li> <li><a href="http://www.wisebread.com/8-debt-reduction-mistakes-even-smart-people-make?ref=5dayplan">8 Debt Reduction Mistakes Even Smart People Make</a></li> <li><a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt?ref=5dayplan">Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?</a></li> <li><a href="http://www.wisebread.com/6-common-debt-reduction-roadblocks-and-how-to-beat-them?ref=5dayplan">6 Common Debt Reduction Roadblocks &mdash; And How to Beat Them</a></li> <li><a href="http://www.wisebread.com/six-steps-to-eliminating-your-debt-painlessly?ref=5dayplan">6 Steps to Eliminating Your Debt Painlessly</a></li> <li><a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt?ref=5dayplan">8 Organizations That REALLY Can Help You With Your Debt</a></li> <li><a href="http://www.wisebread.com/should-you-sell-your-home-to-pay-down-debt?ref=5dayplan">Should You Sell Your Home to Pay Down Debt?</a></li> <li><a href="http://www.wisebread.com/taming-your-debt-aggressive-repayment-strategies?ref=5dayplan">Taming Your Debt: Aggressive Repayment Strategies</a></li> <li><a href="http://www.wisebread.com/the-7-best-credit-card-debt-elimination-strategies?ref=5dayplan">7 Best Credit Card Debt Elimination Strategies</a></li> </ul> <p><em>Have you recently chipped away at a decent amount of debt? How did you do it? What tactics did you employ? I'd love to hear from you in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-search-and-destroy">5-Day Debt Reduction Plan: Search and Destroy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-dont-ever-stop">5-Day Debt Reduction Plan: Don&#039;t Ever Stop</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off">5-Day Debt Reduction Plan: Pay It Off</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-should-you-spend-on-a-new-car">How Much Should You Spend on a New Car?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/best-of-personal-finance-credit-where-credit-is-due-edition">Best of Personal Finance: Credit Where Credit Is Due Edition</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Debt Management 5 day debt reduction plan goals interest rates loans minimum payment payoff plans Tue, 07 Jun 2016 10:31:03 +0000 Mikey Rox 1725700 at http://www.wisebread.com 5-Day Debt Reduction Plan: Stop Waiting for Tomorrow http://www.wisebread.com/5-day-debt-reduction-plan-stop-waiting-for-tomorrow <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-day-debt-reduction-plan-stop-waiting-for-tomorrow" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_binoculars_000029643960.jpg" alt="Woman learning to stop waiting for tomorrow with debt " title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>[Editor's Note: This is the first part of a five-part series on debt reduction. To read more, see <a href="http://www.wisebread.com/topic/5-day-debt-reduction-plan" target="_blank">5-Day Debt Reduction Plan</a>.]</p> <p>Debt sucks. It ties up your resources, robs you of the ability to save, and can cause stress, anxiety, and depression. Still, debt is a big part of our society &mdash; so big that many don't realize the impact it has on their personal finances, even when they're struggling to keep up with payments.</p> <p>Some people stick their heads in the sand because it's easier to ignore debt than take responsibility. The consequences of overcharging and overspending eventually catch up &mdash; and that burden can lead to other consequences, like <a href="http://www.wisebread.com/your-debt-is-killing-you-heres-the-cure?ref=5dayplan">physical and mental health issues</a> &mdash; but it doesn't have to.</p> <p>If your debt is out of control, <em>today </em>is the day to take control of your money.</p> <p>The good news is that you don't have to be a financial guru or have a ton of cash to succeed. Whether you have a little or a lot of disposable income, you can begin chipping away at your debt little by little each day when equipped with the correct set of tools and a handy guideline.</p> <p>See Also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=5dayplan&amp;utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=5dayplan">Fastest Way to Pay Off $10,000 in Credit Card Debt</a></p> <h2>Debt Reduction Starts With a Decision</h2> <p>Be honest, how long have you been talking about reducing debt? A few weeks? A few months? A few years?</p> <p>Now think back to the first time you expressed a desire to get rid of debt. Have you successfully paid off (or paid down) some of your balances? Or have your balances remained the same or increased?</p> <p>If you answered &quot;yes&quot; to the last question, you're not alone. Getting rid of debt has its challenges, and at times you might think it's impossible. The fact that you're reading this article demonstrates a desire to change your mindset and your situation. It doesn't matter what you've done (or haven't done) in the past; this can be a new beginning and the first day on your journey to eliminating debt.</p> <p>See also: <a href="http://www.wisebread.com/how-to-start-fighting-debt-today?ref=5dayplan">How to Start Fighting Debt &mdash;&nbsp;Today</a></p> <h2>You're Not the Only Person With Debt, But You Still Need to Address It</h2> <p>Some people say debt is a part of life and everyone should stop whining and accept debt for what it is. Don't let the naysayers get in your head.</p> <p>Yes, most of us have some sort of debt, but this doesn't mean we have to accept all types of debt. Student loans and mortgages are &quot;good&quot; debt. They are usually cheap (the interest rates are low), and both generally improve our financial lives (education helps us earn more; a home is a valuable asset).</p> <p>Credit card debt, on the other hand, can be a vicious monster. It's expensive and most of what we borrow for will not improve our financial lives. But the moment we confront the monster and say &quot;no more,&quot; the easier it is to break habits that keep us indebted.</p> <p>See also: <a href="http://www.wisebread.com/how-to-start-fighting-debt-today?ref=5dayplan">8 Signs You&rsquo;ve Crossed from &ldquo;Healthy&rdquo; Debt to &ldquo;Problem&rdquo; Debt</a></p> <h2>What Led to Your Debt?</h2> <p>There's not one particular bad habit, but rather several possible habits. Everyone has their own weakness &mdash; mine, for instance, is clothes shopping &mdash; and it's each person's responsibility to identify habits that keep them in a pattern of overspending.</p> <h3>Impulse Buying</h3> <p>Most of us are familiar with this type of buying. You go to the store with intentions of buying one item, but you walk out with three or four items &mdash; basically every trip to Target I've ever had; you know what I'm talking about. This behavior may seem innocent, but it can throw off your budget and increase the likelihood of debt.</p> <p>See also: <a href="http://www.wisebread.com/13-creative-ways-to-avoid-spending-money?ref=5dayplan">13 Creative Ways to Avoid Impulse Spending</a></p> <h3>Lack of a Budget</h3> <p>If you never budget, you probably have no idea where your money goes, which means you could be overspending on nonessentials and using credit cards as an extension of your income. Keeping a paper trail helps you visualize how much you're spending and where your money is going, and that alone can be a deterrent to spending more.</p> <p>See also: <a href="http://www.wisebread.com/one-simple-thing-you-can-do-to-start-budgeting-today?ref=5dayplan">One Simple Thing You Can Do to Start Budgeting Today</a></p> <h3>Keeping Up With the Joneses</h3> <p>If your best friend or neighbor buys a new car, you may feel pressure to keep up and prove you can hang with the big spenders. But in reality, you're digging a financial hole for yourself.</p> <p>We're all guilty of at least one of these bad financial habits. We're human, so we're going to make mistakes. But regardless of the habit(s) you're guilty of, you <em>can </em>break the cycle.</p> <p>See also: <a href="http://www.wisebread.com/how-to-keep-peer-pressure-from-destroying-your-finances?ref=5dayplan">How to Keep Peer Pressure From Destroying Your Finances</a></p> <h3>Lack of Income</h3> <p>This isn't a habit, exactly, but whenever our income falls short of our expenses, and we've cut as much as we can, it's time to find more money. Whatever side job or career shift you choose, keep your debt reduction goals in mind. The extra money you earn should go first toward your debt reduction plan.</p> <p>See also: <a href="http://www.wisebread.com/100-ways-to-make-more-money-this-year?ref=5dayplan">100+ Ways to Make More Money This Year</a></p> <h2>The High Cost of Credit Card Debt</h2> <p>If you need help overcoming bad habits and breaking out of debt, it helps to have an understanding of the <a href="http://www.wisebread.com/the-most-valuable-thing-debt-takes-from-you-isnt-money-its-this?ref=5dayplan">true cost of debt</a>.</p> <p>Take for example a $5,000 credit card balance. If you're making $100 payments every month, in your mind, you should be able to pay off this debt in roughly 50 months (4 years). It's simple mathematics, right? Well, not exactly. There's this &quot;little&quot; thing called interest, which is what you pay for the privilege of using credit.</p> <p>Let's say the interest rate on that $5,000 is 18%. Making $100 payments every month, it will take almost eight years to pay off the balance, and you'll have paid over $4,000 in interest, for borrowing that $5,000. Think of how much interest you could <em>earn</em> if you invested that money instead.</p> <p>When you get a credit card statement, the amount due is typically between 1%-3% of the total balance. It will take a staggering amount of time to pay off your debt if you only make minimum payments. If you're just making the minimum payments, to pay off $5,000, it would take <strong>more than 39 years</strong>. You would have paid over $8,000 in interest.&nbsp;</p> <p>&quot;It will take a discouragingly long time to pay off a debt if you stick to only minimum payments,&quot; says Julie Ford, a financial planner in New York City. &quot;Creditors want you to only pay the minimum amount so they can collect interest from you for as long as possible.&quot;</p> <p>The more money you give creditors, the less money you have available for building a rainy day fund. And of course, if you don't have a reserve, it only takes one emergency to put you deeper in debt.</p> <p>According to the American Household Credit Card Debt Study, the &quot;average U.S. household with debt carries $15,762 in credit card debt,&quot; and a recent Google Consumer Survey found that &quot;approximately 62% of Americans have less than $1,000 in their savings accounts, and 21% don't even have a savings account.&quot; As a personal finance expert who has experienced debt myself, these statistics are sobering to say the least.</p> <p>When debt prevents saving for a rainy day fund, it may also interfere with your ability to save for retirement. Even if you have a 401K or an individual retirement account, you might only contribute the bare minimum, if anything. As a result, the prospect of working until you're literally on your deathbed is a real possibility.</p> <p>See also: <a href="http://www.wisebread.com/everything-you-didn-t-understand-about-credit-card-interest-grace-periods-and-penalty-aprs?ref=5dayplan">Everything You Didn&rsquo;t Understand About Credit Card Interest</a></p> <h2>Find Your Motivation &mdash; And Stay Motivated</h2> <p>The road to getting your bank accounts into the black can be rough. What's the motivating force driving your desire to reduce debt? If you don't have an end goal or a reason for eliminating debt, it's easy to give up as soon as you hit a bump in the road. I've seen it time and time again, especially from chronic spenders. To avoid this pitfall, brainstorm and write down what you hope to accomplish by reducing debt.</p> <ul> <li>Do you want to set a good example for your children?<br /> &nbsp;</li> <li>Are you tired of losing sleep and worrying about your debt?<br /> &nbsp;</li> <li>Do you want to buy a house, but fear debt will prevent qualifying for a mortgage?</li> </ul> <p>Of course, it isn't enough to know what motivates you, but rather you have to stay motivated. The best way to do this is to surround yourself with likeminded individuals &mdash; those who share your goal and can offer encouragement along the way &mdash; and avoid those people who encourage your negative spending habits, like your house-poor friends who spend all their disposable income on Thirsty Thursday shots and late-night tacos. (We all still have a few of 'em.)</p> <p>If your close friends and family are in debt and don't have a desire to reduce or eliminate their balances, don't expect these people to steer you in the right direction or provide the support you need. Look outside your inner circle and connect with people who share your mindset. For example, you can work with a financial planner, join a debt support group, or follow the debt success stories of personal finance bloggers.</p> <p>See also: <a href="http://www.wisebread.com/5-inspiring-people-who-each-paid-off-over-100000-in-debt?ref=5dayplan">10 Dark-Side Motivations to Get You Out of Debt</a></p> <h2>Stop Procrastinating</h2> <p>Procrastination is the avoidance of starting or completing a task. It's a natural human tendency and we procrastinate for different reasons. These reasons might include the fear of failure, lack of interest, and even the fear of success. But with regard to debt, procrastination might have everything to do with lack of knowledge. You know you need to deal with your debt, but you don't know how, so you put it off.</p> <p>If you want to overcome procrastination, you have to learn ways to make debt reduction a reality. It's a step-by-step process that can take months or years. But the process is easier than you think when you have realistic expectations and set small, manageable goals for yourself</p> <p>But before you can get to that point, you need to first find out how much you owe and learn strategies to monitor your debt. Check back tomorrow, and we'll take that first step by Adding It Up.</p> <h2>Debt Management Resources</h2> <ul> <li><a href="http://www.wisebread.com/how-to-manage-your-debt-in-10-minutes-a-week?ref=5dayplan">How to Manage Your Debt in 10 Minutes a Week</a></li> <li><a href="http://www.wisebread.com/5-debt-management-questions-youre-too-embarrassed-to-ask?ref=5dayplan">5 Debt Management Questions You&rsquo;re Too Embarrassed to Ask</a></li> <li><a href="http://www.wisebread.com/6-free-debt-management-tools?ref=5dayplan">6 Free Debt Management Tools</a></li> <li><a href="http://www.wisebread.com/12-reasons-your-debt-isnt-diminishing?ref=5dayplan">12 Reasons Your Debt Isn&rsquo;t Diminishing</a></li> <li><a href="http://www.wisebread.com/8-debt-reduction-mistakes-even-smart-people-make?ref=5dayplan">8 Debt Reduction Mistakes Even Smart People Make</a></li> <li><a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt?ref=5dayplan">Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?</a></li> <li><a href="http://www.wisebread.com/6-common-debt-reduction-roadblocks-and-how-to-beat-them?ref=5dayplan">6 Common Debt Reduction Roadblocks -- And How to Beat Them</a></li> <li><a href="http://www.wisebread.com/six-steps-to-eliminating-your-debt-painlessly?ref=5dayplan">6 Steps to Eliminating Your Debt Painlessly</a></li> <li><a href="http://www.wisebread.com/8-organizations-that-really-can-help-you-with-your-debt?ref=5dayplan">8 Organizations That REALLY Can Help You With Your Debt</a></li> <li><a href="http://www.wisebread.com/should-you-sell-your-home-to-pay-down-debt?ref=5dayplan">Should You Sell Your Home to Pay Down Debt?</a></li> <li><a href="http://www.wisebread.com/taming-your-debt-aggressive-repayment-strategies?ref=5dayplan">Taming Your Debt: Aggressive Repayment Strategies</a></li> <li><a href="http://www.wisebread.com/the-7-best-credit-card-debt-elimination-strategies?ref=5dayplan">7 Best Credit Card Debt Elimination Strategies</a></li> </ul> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/5-day-debt-reduction-plan-stop-waiting-for-tomorrow">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-escape-the-paycheck-to-paycheck-cycle">How to Escape the Paycheck-to-Paycheck Cycle</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-dont-ever-stop">5-Day Debt Reduction Plan: Don&#039;t Ever Stop</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-add-it-up">5-Day Debt Reduction Plan: Add It Up</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt">The Fastest Method to Eliminate Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-search-and-destroy">5-Day Debt Reduction Plan: Search and Destroy</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management 5 day debt reduction plan budgeting impulse spending income interest keeping up with the joneses Mon, 06 Jun 2016 10:30:06 +0000 Mikey Rox 1723444 at http://www.wisebread.com The Fastest Way to Pay Off $10,000 in Credit Card Debt http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/fastest-way-to-pay-off-10000-in-credit-card-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/girl_mouth_cover_iStock_000034382550_605x340.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I personally paid off over $10,000 in credit card debt in my early 20s using a very simple strategy. My 2-step plan will reduce your payments, pay down debt faster, and improve your credit.</p> <h2>Step 1: Save Thousands By Stopping Your Interest Payments</h2> <p>First recognize you have to stop paying interest. If you keep paying interest, you&rsquo;ll make little progress towards paying off your debt.</p> <div id="interest-principal-pie"><img width="200" align="right" height="177" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/interest-principal-pie.png" /></div> <p>For example, if you owed $10,000 credit card debt and paid $250 a month:&nbsp;</p> <ul style="margin-left:1em;"> <li>$177 of your $250 payment would go towards paying interest. That's $177 of your payment pocketed by the credit card company for free!<br /> &nbsp;</li> <li>Only $73 (29%) goes towards paying down the $10,000 principal.<br /> &nbsp;</li> <li>At this rate, it would take <b>69 months</b> to pay off your debt, and it would cost you a staggering <b>$7,535</b> in interest!</li> </ul> <p>This is an uphill battle you simply can&rsquo;t win. You need to stop paying interest ASAP.</p> <div id="total-interest"><img width="500" height="308" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/total-interest-902.png" /></div> <p><b>How do you <em>legally</em> stop paying interest?</b></p> <p>Find a credit card with a <b>0% introductory balance transfer APR offer</b> that lasts until at least 2017 (<a href="#recs">see my recommendations below</a> for the best card). Thanks to the recovering economy, banks have been offering the best promos and longest 0% APR intro periods I've seen since before the financial crisis in 2008.</p> <p>Apply for a card and immediately transfer all your credit card debt to the new card. By eliminating interest for 18 months, you can pay off the entire $10,000 debt <b>two years faster</b> and <b>save $6,006 in interest</b>!</p> <h2>Step 2: Develop Your Payment Plan</h2> <p>Take your credit card debt and divide it by number of months in your 0% introductory balance transfer APR period. For example, say you owe $5,000 and got an 18-month 0% APR balance transfer card. Your monthly payment should be $277:</p> <p>$5,000 / 18 months = $277 monthly payment.</p> <p>That is still a big payment. But at least you are no longer paying interest, 100% of your payment goes towards paying down your debt.</p> <p>But even if you can't swing that amount, start by getting a 0% APR card and paying more than the minimum every month. The new card will give you a huge head start on eliminating the entire $10,000 debt. Check out this chart to see how you'd <b>save $3,298</b> in two years by using a card with a 0% intro APR for 18 months.</p> <div id="balance-by-month"><img width="500" height="253" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/balance-by-month.png" /></div> <h2><a name="recs"></a>Stop Procrastinating: Get Started Now</h2> <p>Every day you wait adds more interest to your debt. If you&rsquo;re reading this article right now it means you&rsquo;re serious about paying off debt. Act now and take advantage of your current momentum.</p> <p>The first small task is to find the right 0% balance transfer credit card. It will only take a few minutes since I&rsquo;ve already done the research for you. After researching hundreds of credit cards, I found the best cards for paying off debt:</p> <h3>BankAmericard&reg; Credit Card</h3> <p><a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=107&amp;pp=1&amp;uv=xcard" rel="nofollow" target="_blank"><img width="154" border="0" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/bankamericard-0523.jpg" class="img-exempt" style="float: right; margin: 0px 5px 5px 10px;" alt="" /></a></p> <p>If you need a really long payment period, the <a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=107&amp;pp=1&amp;uv=xname" target="_blank" rel="nofollow">BankAmericard&reg; Credit Card</a> is the card for you. It offers 0% intro APR on balance transfers for 18 billing cycles, one of the longest introductory periods currently offered by credit cards. This introductory rate applies to balance transfers made within 60 days of opening your account, and there is a transfer balance fee of 3% (min $10). If you can't pay off the whole balance in 18 months, the regular APR is the lowest available on this list at 11.24-21.24% variable for both purchases and balance transfers. There is no annual fee.<strong> </strong><a href="https://consumer.bankofamerica.com/USCCapp/Ctl/entry?sc=VACOW9&amp;pid=dppf">See terms.</a></p> <p><a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=107&amp;pp=1&amp;uv=xend" rel="nofollow" target="_blank"><strong>Click here to learn more and apply for the BankAmericard&reg; Credit Card today!</strong></a></p> <h3>Chase Slate&reg;</h3> <p><a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=39&amp;pp=2&amp;uv=xcard" title="Chase Slate&reg;" alt="Chase Slate&reg;" rel="nofollow" target="_blank"><img width="154" border="0" alt="" src="http://www.imgsynergy.com/191x120/chase-slate-060216.png" style="float:right;margin:0 10px;" class="img-exempt" /></a>The <a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=39&amp;pp=2&amp;uv=xname">Chase Slate&reg;</a> card is the <em>only</em> card on this list that allows you to save with a $0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO&reg; Score for free.(Balance transfers must be made within the first 60 days for the fee to be waived. After that there will be a 5% or $5 fee, whichever is greater.) If you have a big balance to transfer, avoiding the typical 3-5% fee saves $300-500 on a $10,000 balance transfer.&nbsp;</p> <p><a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=39&amp;pp=2&amp;uv=xend" rel="nofollow" target="_blank"><strong>Click here to learn more and apply for the Chase Slate&reg; Card today!</strong></a></p> <h2>BankAmericard Cash Rewards&trade; Credit Card</h2> <p><a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=106&amp;pp=3&amp;uv=xcard" target="_blank" rel="nofollow" alt="BankAmericard Cash Rewards&trade; Credit Card" title="BankAmericard Cash Rewards&trade; Credit Card"><img border="0" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/BoA_Cash_Rewards-154.jpg" alt="" class="img-exempt" style="float:right;margin:0 10px;" /></a>The <a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=106&amp;pp=3&amp;uv=xname" rel="nofollow" target="_blank">BankAmericard Cash Rewards&trade; credit card</a> is good for people who have less than $5,000 in credit card debt and would like to earn cashback rewards. If you have a smaller balance to pay off, the 12 billing cycles of 0% intro APR period might be long enough. Once you've paid off your balance, use this card to earn 2% cash back at grocery stores and wholesale clubs and 3% cash back on gas for the first $2,500 in combined spending each quarter, and 1% cash back on all other purchases. Bank of America customers get can a 10% bonus if you redeem your cash back into a Bank of America checking or savings account. This card is a great day-to-day card for earning the most cash back on gas and groceries. There is no annual fee. <a href="https://consumer.bankofamerica.com/USCCapp/Ctl/entry?sc=VACNW5&amp;pid=dppf">See terms.</a></p> <p><a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=106&amp;pp=3&amp;uv=xend" target="_blank" rel="nofollow"><strong>Click here to learn more and apply for the BankAmericard Cash Rewards&trade; Credit Card today!</strong></a></p> <h3>Citi&reg; Double Cash Card - 18 month BT offer</h3> <p><a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=47&amp;pp=4&amp;uv=xcard" rel="nofollow" target="_blank"><img width="154" border="0" height="98" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/CitiDoubleCash.jpg" style="float:right;margin:0 5px 5px 10px;" class="img-exempt" alt="" /></a>The <a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=47&amp;pp=4&amp;uv=xname" rel="nofollow" target="_blank">Citi&reg; Double Cash Card - 18 month BT offer</a> from our partner Citi is a great card for those who want cash back but <em>don't</em> want to worry about keeping track of categories. This card actually offers cash back twice: 1% cash back when you buy, plus another 1% cash back as you pay for those purchases. Unlike many other cards, this card has no category restrictions, no enrollments in rotating categories, and no limits on the amount of cash back that you earn. There is a 0% introductory APR on balance transfers for 18 months. After that, the variable APR will be 13.24%-23.24%, based on your creditworthiness. There is no annual fee.</p> <p><a href="http://ct.wisebread.com/click.php?pg=214&amp;pid=47&amp;pp=4&amp;uv=xend" rel="nofollow" target="_blank"><strong>Click here to learn more and apply for the Citi&reg; Double Cash Card - 18 month BT offer today!</strong></a></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/greg-go">Greg Go</a> of <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The 5 Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-credit-cards-with-no-balance-transfer-fees">5 Best Credit Cards with No Balance Transfer Fees</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-post-holiday-credit-card-debt">Dealing with Post-Holiday Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-debt-settlement-can-leave-you-deeper-in-debt-even-with-trustworthy-companies">6 Ways Debt Settlement Can Leave You Deeper in Debt (Even With Trustworthy Companies)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/now-is-the-best-time-in-years-to-do-a-credit-card-balance-transfer">Now Is the Best Time in Years to Do a Credit Card Balance Transfer</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Debt Management balance transfer credit card debt Sat, 04 Jun 2016 04:15:32 +0000 Greg Go 1723974 at http://www.wisebread.com 5 Things Debt Collectors Don't Want You to Know http://www.wisebread.com/5-things-debt-collectors-dont-want-you-to-know <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-things-debt-collectors-dont-want-you-to-know" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_debt_collector_000085025055.jpg" alt="Woman learning what debt collectors don&#039;t want you to know" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're already struggling with bills you can't pay. And now a debt collector is on the other end of the phone, demanding that you come up with the cash. And if you don't, that debt collector sure makes it sound like a lot of terrible things could happen to you.</p> <p>But here's what you might not know: The federal government, through its Fair Debt Collection Practices Act, gives you certain rights. If the collection agency calling you violates any of them, you can report it to the Federal Trade Commission or your state's attorney general.</p> <p>The debt collector calling you might not share this information with you. Just like it might keep other debt-collection secrets to itself. Here are five secrets that collection agency doesn't want you to know.</p> <h2>1. You Can Stop Their Calls With a Letter</h2> <p>Tired of receiving calls from a collection agency? You can stop them by writing the agency a letter requesting that they refrain from contacting you in the future. Debt collection agencies are required by the Fair Debt Collection Practices Act to honor such a written request. Be aware, though, that the <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt" target="_blank">debt you owe</a> still exists. And if you don't pay it back, collection agencies are allowed to take legal action &mdash; they can sue you &mdash; to force you to pay up. If a collection agency does decide to take legal action, it is allowed to contact you to let you know, even if you've written a cease-and-desist letter.</p> <h2>2. You Can Request a Payment Plan</h2> <p>Collection agencies prefer that you come up with all the cash that you owe at once. If that's not possible, these agencies will seek the biggest possible payment that you can afford. But you can request a repayment plan that works within your budget. Negotiate with collection agencies to work out a smaller monthly payment, one that won't drain your bank account. Collection agencies aren't required to accept a payment plan. But it never hurts to request one, and many debt collectors understand that an affordable monthly payment plan is often the best solution.</p> <h2>3. Debt Collectors Have Limits</h2> <p>Under federal law, debt collectors are not allowed to call you several times a day or at odd hours. This is a bit vague, but collectors shouldn't be calling you five times a day or ringing your phone at 4:00 a.m. Debt collectors also can't call you at work if you request that they not do so. And&nbsp;debt collectors can only contact your neighbors, family members, friends, or coworkers to find your current address or phone number. The Fair Debt Collection Practices Act forbids them from talking to other people besides you and your attorney about your debt.</p> <h2>4. You Can't Go to Jail Because of Debt</h2> <p>The United States does not throw people in jail because they owe money. There is no debtors' prison here. So, debt collectors can't say that you'll end up in prison because you owe money. Debt collectors also can't threaten to sue you unless they actually do plan to begin legal action against you. Federal law also forbids collectors from using threatening or profane language when trying to collect a debt.</p> <h2>5. Debt Collectors Have Certain Responsibilities, Too</h2> <p>Collection agencies have to follow certain guidelines when trying to collect unpaid debts. One of the biggest? Within five days of contacting you about an unpaid debt, the agency must send you a written notice stating how much you owe and the name of the creditor that is seeking the money. The letter must also spell out the steps you can take if you don't believe you owe this money. You can also request that a debt collector verify any debt that you owe. Collectors can't make any additional phone calls until they send you a written letter verifying that you do indeed owe what your creditor claims. Only after sending this letter can a debt collector resume contact with you.</p> <p>It's easy to feel overwhelmed when a debt collector calls. But don't forget your rights. Be sure, too, to let debt collectors know that you understand your rights and that you will take action if the collector violates them.</p> <p><em>Have you ever been pestered by a debt collector? How'd you get them to stop?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-things-debt-collectors-dont-want-you-to-know">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-annoying-things-bill-collectors-cant-do-and-how-to-stop-them">4 Annoying Things Bill Collectors Can&#039;t Do -- And How to Stop Them</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-deal-with-collection-agencies">How to Deal With Collection Agencies</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-debt-management-questions-youre-too-embarrassed-to-ask">5 Debt Management Questions You&#039;re Too Embarrassed to Ask</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-signs-you-arent-making-enough-money">6 Signs You Aren&#039;t Making Enough Money</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/prioritize-these-5-bills-when-youre-short-on-cash">Prioritize These 5 Bills When You&#039;re Short on Cash</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management bills Collection Agencies debt collectors federal government federal trade commission harassment Fri, 27 May 2016 09:00:11 +0000 Dan Rafter 1718092 at http://www.wisebread.com 6 Signs You Aren't Making Enough Money http://www.wisebread.com/6-signs-you-arent-making-enough-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-signs-you-arent-making-enough-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_stressed_computer_000044901658.jpg" alt="Woman learning signs she isn&#039;t making enough money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Living paycheck to paycheck can take a toll on your stress levels and emotional wellbeing. It can also greatly impact your financial wellbeing both in the present and in the future. If you aren't confident about your financial future, then it's time to make a change. Here are a few signs that you need to spend less &mdash; or make more.</p> <h2>1. Your Bills Are Overwhelming</h2> <p>If you don't make enough to pay your bills every month, then you need to make more. Even paying the minimum amount on your bills is not enough. You should be working to pay off your debt, without having to worry about making enough to buy food every month.</p> <p>Overdrawing your checking account, paying your bills late every month, or ignoring your financial obligations altogether can make the problem much worse. If you commit any of these bad habits, then you'll have to worry about overdraft fees, bounced check fees, and may even be sent to collections. (See also: <a href="http://www.wisebread.com/how-late-payments-affect-your-credit?ref=seealso">How Late Payments Affect Your Credit</a>)</p> <h2>2. Your Budgeting Isn't Enough</h2> <p>The best way to get more out of every paycheck is to simply spend less. Creating a budget can be the right step towards making lasting changes that will pay off big in the end. However, what do you do if you have already created a budget and cut out all the unnecessary spending you can, but still aren't making enough? You'll need to find a way to make more money.</p> <h2>3. You Have No Savings</h2> <p>If you aren't able to pay down your debt and set aside money for your savings and retirement accounts, then you simply need to make more. In the event that there is a large unexpected expense coming your way, you should have some savings to cover it. It is crucial that you set aside money for your future, and if you aren't, then you need to do something to change the present.</p> <p>It's important to keep your money goals and future finances in mind. It's essential that you are saving for your future, in the event that you experience a pay cut or layoff. Saving for retirement is also one of the most important things you can do for your future self. If you aren't reaching your short and long-term financial goals, then you aren't making enough money.</p> <h2>4. You Keep Relying On Credit Cards</h2> <p>If you find that you are relying on your credit cards just to make ends meet, and are only paying the minimum on your credit cards month after month, you're heading towards prolonged debt and a host of other problems. This can result in a <a href="http://www.wisebread.com/7-ways-to-increase-your-credit-score-quickly" target="_blank">lower credit score</a> and less money available for your savings account. In the long run, you'll also be responsible for higher interest charges and credit card payments.</p> <h2>5. Your Paycheck Disappears in No Time</h2> <p>If you spend the bulk of your paycheck in the first couple of days, then there's a problem. You should have more than just enough to pay your bills. There should be money left to save and invest towards retirement. Everyone has a bad month from time to time, but if you find that your paycheck runs out within the first week of every month, then you may be overspending or simply not making enough.</p> <p>Special occasions occur for most people several times per year. During these times, you'll want to have a little money set aside (for holidays, anniversaries, birthdays, and other occasions that can cut into your pay). The last thing you want to worry about is breaking out the credit cards just because you need to buy gifts for the kids.</p> <h2>6. You Feel Undervalued</h2> <p>If you feel you aren't being paid enough at your current job, then you may get resentful and less productive. Consider speaking with your manager about what you bring to the table and ask for a raise. The worst they can say is &quot;No.&quot;</p> <p>If you decide to ask for a raise, then you need to first determine <a href="http://www.wisebread.com/are-you-underpaid-how-to-figure-out-what-salary-you-deserve">what your time is worth</a>. Use a salary calculator or salary comparison site, and find out what the average salary is for your career so that you have that information on your side when you speak with management. (See also: <a href="http://www.wisebread.com/getting-the-most-out-of-salary-comparison-sites?ref=seealso">Getting the Most Out of Salary Comparison Sites</a>)</p> <h2>Is It Time to Make a Move?</h2> <p>If you realize it's time to make a move, then there are several steps you can take. If you haven't <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps">worked on a budget</a> yet, then it's time to do so. You can also take steps to reduce your rent, find alternate forms of transportation, or simply spend less. You may also need to consider changing employment or taking on a weekend or side job.</p> <p><em>Do you know of other signs that a person just isn't making enough? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/6-signs-you-arent-making-enough-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-good-reasons-to-become-a-contractor">8 Good Reasons to Become a Contractor</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-your-financial-habits-just-bad">Are Your Financial Habits Just Bad?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-keep-holiday-spending-from-blowing-debt-repayment">6 Ways to Keep Holiday Spending From Blowing Debt Repayment</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-escape-the-paycheck-to-paycheck-cycle">How to Escape the Paycheck-to-Paycheck Cycle</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Career Building Debt Management asking for a raise bills paycheck to paycheck salary underpaid wages Mon, 23 May 2016 09:30:20 +0000 Andrea Cannon 1714251 at http://www.wisebread.com 6 Common Debt Reduction Roadblocks — And How to Beat Them http://www.wisebread.com/6-common-debt-reduction-roadblocks-and-how-to-beat-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-common-debt-reduction-roadblocks-and-how-to-beat-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_stressed_work_000088581529.jpg" alt="Woman beating common debt reduction roadblocks" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Debt is big business in the United States. Currently, credit card debt alone is <a href="http://www.voanews.com/content/us-credit-card-debt-nears-one-trillion/3275222.html">approaching $1 trillion</a>, or around $5,700 per household. (For those with a revolving balance, it's closer to $16,000!) Paying it down can be a daunting prospect, so we often build mental roadblocks to avoid it. However, that only prolongs the problem &mdash; and increases the costs. Learn how to get past the following six mental roadblocks, and finally deal with your debt once and for all.</p> <h2>1. I'll Pay It Off Later</h2> <p>This is probably one of the biggest roadblocks of all time, and one that we've all fallen victim to at one point or another. There's so much time left to pay down that debt, but right now, you need as much money as possible from your paycheck. So, you pay the minimum on credit cards, and promise that next year, or the year after, will be the time to start paying down debt.</p> <p>The problem with that strategy is that time literally equals money. Interest <em>loves </em>time, and the longer you wait to pay down a debt, the more interest you accrue. You may even see minimum payments creep up as you add more to the balance each year. Before you know it, a year or two has passed, the debt is even bigger, and it becomes even easier to say &quot;I'll pay it off later.&quot;</p> <h3>How to Get Past This Roadblock</h3> <p>Calculate how long it'll take you to pay off the debt at your current rate, using a <a href="http://money.cnn.com/calculator/pf/debt-free/">repayment calculator</a>. Then, look at your monthly budget. What can you eliminate and apply to the debt payment? Be thorough. Can you double your monthly payment? Can you triple it? Put those figures into the calculator, and you will be amazed at how much sooner that debt is eliminated. Print that out, and put it somewhere you can see it every day. Check off each payment, and count down the months until you're debt free.</p> <p>A balance transfer can be an effective tool to use as part of your debt repayment plan. Once you&rsquo;ve narrowed down the timeline you can pay off an amount, use a credit card with a <a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">0% intro APR offer on balance transfers</a>. Most cards will charge a balance transfer fee (between 3-5%) on the balance transferred. The best option is the <a href="http://www.wisebread.com/chase-slate-visa-review?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">Chase Slate card</a>, which offers 15 months 0% intro APR <em>and</em> no intro balance transfer fee (balance must be transferred within the first 60 days), <em>and</em> it has no annual fee. It literally costs nothing to move your balance over and get a break from interest for 15 months. Just be sure that you can, and will, pay off the entire balance within those 15 months, or else you&rsquo;re right back where you started. (See also: <a href="http://www.wisebread.com/which-balance-transfer-credit-card-is-the-best-for-you?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=article">Which Balance Transfer Credit Card Is Right for You?</a>)</p> <h2>2. I Don't Want to Spend My Money on Debt Payments</h2> <p>Let's be honest. Not one person reading this article gets excited about the prospect of using their hard-earned money on debt reduction. After all, you worked hard for that money, and you want to use it on something fun, or meaningful &mdash; a vacation, a new appliance, a night out, or just putting it into savings. It's way better than giving it to some credit card company that has more money than a small country.</p> <p>But, when you're not spending money on debt reduction, you're allowing the debt to get bigger. And bigger. Eventually, you will have to pay it off, and you'll be spending <em>even more</em> of your money on that debt. Plus, don't forget who got you into debt in the first place. You didn't spend your hard-earned money at all; you borrowed it to get those nice things you wanted.</p> <h3>How to Get Past This Roadblock</h3> <p>First, come to terms with the fact that when you're not spending money on debt reduction now, you'll be spending more on it later. Also, realize that you borrowed this money, and at a cost. The longer you wait to pay it down, the more you'll owe. Use an amortization calculator to see the cost of the interest you're accruing while you only pay the bare minimum. In some instances, your monthly payment is literally going towards nothing but interest, and that should be a sharp wake-up call.</p> <h2>3. I'd Rather Live Well and Be in Debt</h2> <p>Fancy shoes. Big car. Year-round tan. Jewelry. Designer clothes. They are all status symbols, and give the owner a feeling of pride and accomplishment. That is, until the owner gets home and looks at the stack of bills and debts that have mounted up. It sure does feel nice to have expensive clothes and accessories, but the cost can be more than money. It can equate to stress, illness, and broken relationships. Living well on borrowed money is no way to live at all, and eventually, the piper will come calling.</p> <h3>How to Get Past This Roadblock</h3> <p>Calculate the true cost of the things you think you need now &mdash; not just the price of the item, but the interest you're paying on it over time. A $200 item at 12% interest will actually cost $279 if you pay only the minimum of $4/month on it. And it will take four years to pay that off. That's money down the drain. Instead, if you must have brand names and high-end items, look at eBay, Craigslist, and thrift stores for good quality used options. You can maintain your image (no one is going to ask where you got it), and save a ton of money.</p> <p>Put that money you saved into your debt reduction fund. Find Groupons and coupons for eating out and other activities. Bring lunches to work to subsidize the costs of your nights out, and must-have purchases. Even CEOs bring lunches to work, no one is going to think you're a cheapskate. And finally, figure out what living well really means. Things are just that. They are not what make life worth living. Family, friends, and memories &mdash; these are the things that matter.</p> <h2>4. It's Free Money!</h2> <p>You'll be amazed at how many people think credit is free. They see $15,000 credit limits and their eyes widen like saucers. A spending spree ensues, and after a few months, that card is maxed out. But who cares &mdash; you just pay the minimum and get another card!</p> <p>This is the state of mind that gets people into all sorts of financial trouble, and credit card companies love these people. In fact, people who pay off their cards each month are called &quot;deadbeats&quot; by creditors; they don't make them any money. They love the customers who carry high balances, and pay only the minimum each month. It can take 20, 30, or even 40 years to pay off debt in that way, as so little of the payment goes to the principal. It is not free money. Not even close. If you don't pay debt back in full each month, it costs. And that cost can equate to many thousands of dollars in interest payments every year.</p> <h3>How to Get Past This Roadblock</h3> <p>First, you need to tell yourself repeatedly that this money is not free. Next, look at your household expenses, and see how much of it you're actually putting on the credit cards. If you're not paying that off every month, you're spending more on groceries and clothing than you should be. Find a way to stop using those credit cards for a few months. Use your debit cards, checks, and cash to pay for items, instead, and concentrate on paying down the debt you have accrued. After a few months without credit, you can assess your situation and see if you really need those cards, at all.</p> <h2>5. Everyone Has Debt</h2> <p>This is not strictly true, although the numbers are staggering. Around 80% of Americans are in debt, but 44% of that is mortgages. If we examine credit card debt alone, only 39% of Americans carry a balance month-to-month. That's far from a majority, and certainly not a group you want to be a part of. And besides, just because a lot of people do something, it's hardly an excuse to do it, too. Over 42 million Americans smoke cigarettes, but that's not a compelling reason to join them.</p> <h3>How to Get Past This Roadblock</h3> <p>Forget about everyone else. Yes, they may have credit card debt and loans, but they are not you. And what's more, you have no idea what kind of financial trouble they're in. They may not be managing their credit cards well at all, and may be painting on a smile to cover the stress they're under. Concentrate on yourself, and your own debt.</p> <p>Lay it all out on a spreadsheet, or even a notepad. What are the balances, what are the interest rates, and how long will it take to pay each one off at your current rate? Can you consolidate loans? Can you transfer a balance to another card for 0% interest for one year? That will help pay it down. Make a start, and decrease the balances each month. You will feel good knowing that you're making progress, and can be proud of the fact that you're about to join the 61% of Americans who don't have a revolving balance.</p> <h2>6. I'll Never Pay It Off &mdash; What's the Point?</h2> <p>Debt has unfortunately become a way of life for many of us, and we feel like it'll never go away. But it's simply not true. Debt doesn't have to be a part of anyone's life. Maybe you fell on hard times, and the credit cards and loans bailed you out. Maybe you had some unexpected expenses, and had to turn to credit. Regardless, debt doesn't have to become a way of life.</p> <h3>How to Get Past This Roadblock</h3> <p>Tell yourself that your debt is something that can be beaten. Then, gather your bills, and arrange them from the smallest balance to the largest. Figure out how much money you can put towards a payment, and then, <a href="http://www.wisebread.com/a-comprehensive-guide-to-the-debt-snowball-method-0">snowball your debt</a>. Start with the smallest balance, and pay off as much as you can each month, applying minimum payments to the other balances. When that first debt is paid off, apply the payment to the next largest debt, and so on. This is one of the best ways to see progress, and give you hope.</p> <p>It can be daunting to try and take on the big debts first. And as you see so little progress month-to-month, doing it in reverse gives you a sense of achievement, and this will help you stay on course to finally pay off your debt.</p> <p><em>What are you doing about your debt?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/6-common-debt-reduction-roadblocks-and-how-to-beat-them">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-day-debt-reduction-plan-stop-waiting-for-tomorrow">5-Day Debt Reduction Plan: Stop Waiting for Tomorrow</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt">The Fastest Method to Eliminate Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-debt-management-questions-youre-too-embarrassed-to-ask">5 Debt Management Questions You&#039;re Too Embarrassed to Ask</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-sobering-facts-about-student-loan-debt">5 Sobering Facts About Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-debt-reduction-mistakes-even-smart-people-make">8 Debt Reduction Mistakes Even Smart People Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management balance transfers budgeting excuses repayment roadblocks snowball method Tue, 17 May 2016 10:30:04 +0000 Paul Michael 1709865 at http://www.wisebread.com