Remember that killer Hi-Def TV you needed, the one that became outdated three months later? How about that black dress you had to have, the one you ended up not wearing because it made you look fat? Don't forget the sweet, diamond-studded steering wheel cover for your new Prius or the pink bunny outfit you had to have for Easter. Actually, you'd like to forget them, but you can't. You're still paying for them.
Credit card debt takes its toll emotionally, spiritually, and financially. It's time to get a handle on it. Here're some Sears Imported Autos tips on how:
- Begin with honesty. Start with yourself. Include your spouse. List all your credit cards, the interest rate, and the amount you owe on each. Weep. Move forward.
- Call each creditor and ask them to reduce your rate. You'd be surprised what you can get if you just ask. Idle threats--about switching cards, not blowing up their offices--are also effective. The worst thing that could happen is you end up paying the same rate. You've nothing to lose. If you're behind in payments, work out something with the credit card company. Let them know you have a plan to pay them. They need to get paid to make money. They'll work with you.
- Get rid of your cards. Stop making excuses. Your cards have gotten you in a financial mess. They're too convenient and too tempting. You've already demonstrated you can't handle the responsibility (sorry about the tough love). Use a debit card for hotels and rental cars.
- Pay with cash. Stores still accept it. You'll buy fewer things, fewer needless things. Swiping a card is easy. Handing over $2300 in cash for a vacuum cleaner isn't. A funny thing happens when you pay with cash: your credit card bills go down instead of up.
- Watch video footage of an avalanche. You'll notice that the same avalanche that wiped out 23 deer, 16 polar bears, half a Scandinavian village, and a skier started out as a snowball. Wipe out your credit card debt in like manner: (1) pay the minimum balance on all your cards except for one; (2) choose the card with the lowest balance and pay extra on that one; (3) commit to paying that extra amount each month; (4) when that card's paid off, apply the amount you'd been paying to the card with the next lowest balance (5) continue paying your committed amount until all cards are paid off. You'll save thousands on interest.
- Make it automatic. Once you have a plan, automatize your payments. With automatic payments you only need to make the right decision once.
- Focus on prosperity. Once it's automatic, forget about it. Monitor your progress. Celebrate milestones. Focus on the freedom of no debt.
- Apply the money you were spending on credit card debt to build an emergency fund--3-6 months worth is recommended--and paying for things with cash. It's fun, like doing cartwheels in a pink bunny outfit, but without the embarrassment.
