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Pay Off Your Debt Without Ruining Your Credit Rating

There are lots of ways to eliminate your charge card account debt. You could declare credit card companyruptcy, you could call one of those “secrets the charge card account companies don’t want you to know” places and really destroy your credit rating, or, you could follow my simple plan for paying off all your credit cards, while actually improving your credit score.

Now the plan is simple, but it is not easy. To make it work you are going to need to exercise a large amount of self control, and be committed to paying off your charge card debt.

Paying off your debt is going to have to become more important to you than having the latest car, the biggest house, or even the nicest shoes. In some cases, to pay off your debt you are going to need to make some sacrifices in your style of living.And it won’t happen overnight.

Paying off your credit card account debt is a lot of hard work, but the rewards are outstanding. If you follow my plan, not only will you pay off your charge card accounts, at the same time you will be building an emergency fund savings account. Imagine how it will feel to be debt free, and with money in the lender. Imagine not needing to worry if your car needs repair. Imagine what it would be like to on a first class vacation, and not have to worry about paying the bills when you get home.

I know what I am talking about. There was a time when I had almost $30,000 in credit card debt. Plus a mortgage! 5 years ago I paid off my last debt, and I have lived debt free ever since. But that does not mean I am living the frugal life. Before I paid off my debt I was paying almost $2,000 per month in interest alone! (That included my mortgage, which I also paid off.) Paying off that much debt freed up a bunch of cash each month. Since I have become debt free I have taken a two week first class vacation to Belize, and paid cash! I have bought a car, with cash, and I have enough in savings that I will be OK for a long time if I happen to lose my job.

Now normally this would be the place where I would tell you to buy my book, or sign up for my seminar, but that is not what I am going to do! Keep reading and I will tell you exactly what you need to do to pay off all your debt and become debt free.

Step Number 1- Find Out Exactly How Much You Owe On Your Credit Cards

Get all your charge card statements together, and then using either a spreadsheet, or just a piece of paper, across the top create the following categories.Credit Card Name, Total Amount Owed, Interest Rate, Minimum Payment. Now using your credit card statements fill out the worksheet for every credit card account that you are carrying a balance on. Then add up the total amount owed, and the total minimum payment. Take a moment to just look at these numbers. Look at the minimum payment amount. What could you do with that amount of cash if you didn’t have to send it to your charge card accounts? Now look at at the total amount due. Don’t worry about how big the number is, don’t feel guilty about running up that much debt. But do accept that this is the amount of debt you have, and that you are committed to getting rid of it.

Step 2 – What to Do When You Can’t Pay the Minimum Payments On Your Credit Card

Now go back to that minimum payment amount. If you regularly pay more than the minimum payment, I will get back to you in just a minute. But keep reading if you want to really accelerate paying off your credit card accounts. If you can’t pay more than your minimum payment, or if you are not able to pay even the minimum payments on your credit card account. Listen UP! You are spending more than you earn. As long as you spend more than you earn, you will only get deeper and deeper in debt. And it will only get harder and harder to get it all paid off. Starting immediately you need to spend less, and make more. Personally I find spending less quite a bit easier than earning more. But I will be writing more hubs later that deal with both of these topics in more detail.

But for now, first look to where you can cut back on spending. You may think that you have cut back as much as you can, but I can almost bet you have not. Sometimes it takes drastic measures to make a real dent in your spending. Taking your lunch to work and passing on the daily latte will certainly help, but here are a couple ideas that will turbo charge your efforts to get your credit card account debts paid off.

Consider selling your car and using public transportation. If you are making payments on your car, this might be all you need to get on the fast track for paying off your credit card accounts. Just make sure you can sell your car for enough to pay off the entire debt.
The second big step you can take to increase your income without taking another job is to consider taking in a roommate. In my area you can rent a room in your house for $500 per month. Once again, think about how quickly you could pay off your charge card accounts if you paid an extra $500 per month.

Step 3 – Paying Off Your Credit Cards, Have a Plan

Pull out your spreadsheet and take another look at your minimum payment. Now decide how much extra you can put towards paying off your charge cards.If you can’t come up with an extra amount, then go back and read the previous paragraphs. For the plan to work in a reasonable amount of time, you need to be able to pay more than the minimum payment. Decide which charge card you would like to pay off first. Some people like to pay off the card with the highest interest rate. That makes sense, because in the long run you will pay less in interest. Some people like to pay off the card with the lowest balance first. That way they will have the satisfaction of getting a card paid off in the quickest amount of time. Either way is fine with me, as long as you pick just one card that you want to pay off first, and stick with the decision.As you pay off each card, you will roll over the total payment into the next card you want to pay off.

For all of your charge cards except one, you are going to pay just the minimum payment…no more! This starting minimum payment is the payment you are going to make until the card is paid off. Over time, your minimum payment will go down, but the amount you pay on the card will not.

Now lets take a look at your extra payment amount. If it is under $12 take half of it and make that the additional payment on the card you are paying off first. That is right, I said half. Even if it is only $1. The other half of your extra payment amount you are to deposit in an emergency only savings account. Even if it is only $1. Now I know that most banks will not open a savings account for only a dollar. Get creative, you don’t need to keep the money at a credit card company, but you do need to put it aside to be used only for emergencies. And I mean real emergencies. You biggest priority right now is to pay off your debt. Your emergency fund is to be used only for things you literally can’t live without. If your extra payment amount is $12 or more, I want to you split it in thirds. One third to paying off your debt, one third to your emergency savings account, and one third to fun money.

Step 4 – Automate Your Credit Card Payments

Now that you know exactly how much you will be paying on your charge card accounts each month, you can set up your payments so they happen automatically. Most lenders will let you do this through online banking, or you can contact your charge card account company and they will set you with an automatic payment plan. With all your payments on auto pilot, you won’t be late making a payment, and you won’t be tempted to skip a payment. You just need to be sure that you have enough in the credit card company to cover your payments.

Step 5 – Pay Cash for Everything

Let me tell you about a very difficult day in my life. I had committed to paying off my charge card account debt, and that meant not charging anything. How can you pay off your debt if you are continually adding to it? I was in the middle of putting in an above ground pool. It was May and the days were beginning to get warm. I couldn’t wait for my pool to be done so I could enjoy it. But on this particular day I realized that I needed some extra parts for the pool. I didn’t have the cash for it. I knew it could take weeks to save up the money for the parts, weeks that I could be swimming in my new pool. I am happy to say that I stuck to my plan. I made an extra effort to cut costs, and I did various odd jobs that I could find to bring in more money. In two weeks I had saved enough to buy what I needed to finish the pool, without adding to my charge card account debt.

Paying cash for everything is the hardest part of the plan, and the most important. As the old saying goes, if you want to get out of the hole, quit digging! This was the most challenging part for me and for most people. But once you get in the habit of paying with cash or doing without, you wil find that it gets easier and easier. Plus you will be getting the satisfaction of watching your charge card balances go down for a change.

The Final Step To Becoming Debt Free

Every once and again, most people will have a time when some extra cash comes into the house. It could be a tax refund, a raise a work, even an inheritance you didn’t know was coming. Whenever that happens, just apply the one third rule. One third goes to paying off debt, one third goes to emergency savings, and one third goes to fun cash.

A funny thing starts to happen as you learn to live on a cash basis, and as you watch your charge card account balances decline. You start to enjoy living within your means. You find that you are stressing less about money, and you might actually find yourself feeling sorry for the people with lots of expensive “stuff” that they bought with debt.

And when the day comes when you finally pay off that last charge card account, you will have a huge sense of satisfaction, knowing that you have done what many people attempt, but few actually do.

Also, if you are looking for a balance transfer credit card to bring interest down, www.1-2-3-creditcards.com has the best credit card offers. I would advise starting with Discover cards or Chase credit cards.

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Modern banking system is interested in client solicitation, offering new opportunities and possibilities in case we choose this or that bank. Some of these offers are really tempting, but irrespectively of the advertisement, we are all clients of banks, because it is impossible to imagine 21st century without banking system. Modern banking system is considered unstable because of the constant economic crisis, striking the world’s economic system and dipping us. The most popular services offered by all modern banks are loaning, depositing and credit card issuing. In some countries, loaning is very popular, especially when people don’t get good salaries and cannot afford a car or apartment. Loaning helps to solve this problem and all you have to do is to pay annual interests charged on the sum of your loan. Sometimes, interests are huge and you have to lose too much on them. It seems that loaning is just the way for banks to get your money, but still, for some people it is the way out and a chance to get what they would have only dreamed about if it were not for loaning.
Depositing is getting more and more popular among people nowadays due to the interests you can get if letting your bank use your money. It is nothing but a lease you let your money on and your bank just pay for it. It is very good offer for those people, who would not mind to have extra money for themselves. If you have savings and keep them under your pillow, it is high time for you to deposit them with a bank and earn some money. Of course, both depositing and loaning can be dangerous, considering that banks collapse and take all money with them sometimes, but such collapses don’t happen often, so you don’t have to worry about it.
Finally, the most popular and spread service, provided by banks is issuing of credit cards. People all over the world use credit cards to pay on the Internet, in groceries, marts and clothes shops. Credit cards seem to be handier and more comfortable in use. People don’t want to admit that the only reasons making them use credit cards are trend and money they can borrow in case of necessity. Credit cards let you exceed the limit, which means that if you want to buy something and run out of money, you can withdraw some money from your credit card and pay them back whenever you can. It seems to be a good bargain, but the interests you will have to pay will make a debtor of you. You will have to pay twice as much to debt settlement agents and you will regret having borrowed that money. Don’t get trapped, avoid the credit card debt!

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Search Google or other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and join the online discussion. All this will help you to create a true vision of this market. Thus, giving you a real chance to make a wise and nicely balanced decision.

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