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2008-10-29 08:22:35
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Article by Joseph Maistickle |
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Credit card debt is the single biggest destroyer of wealth for most people. It is just too easy to whip out your credit card and buy something you really can't afford. In the long run whatever you buy with your credit card will end up costing you 50% or more than whatever the original cost was. If you only pay the minimum balance each month you could end up paying double for EVERYTHING you put on your credit card!
How do you end this downward spiral of wealth destruction? First, stop using credit cards. Cut them up and throw them away. Put one card away for emergencies only. If you need to use a credit card, go to your bank and get a debit card - it can be used the same way and you will think about everything you buy with it because it will be deducted directly from your checking account - the good news is you will never pay interest on anything you buy with debit cards.
Now that you've stopped using credit cards what should you do about the balances you owe? There are many schools of thought on this. Some people advise paying off the highest interest first. While this makes sense, I have used the following method with excellent results.
Take the credit card with the lowest balance and try to pay this one off first. Pay as much as you can on this card. On all your other cards pay the minimum balance. Make sure you pay everything on time to avoid late charges or interest rate increases.
Once the first card is paid off - start on the credit card with the next lowest balance. Add the monthly amount you had been paying on the first card to the minimum balance you've been paying and continue to pay the minimum balance on all the other cards. Put as much as you can comfortably afford on this card and continue until it has been paid off completely.
Continue to use this method on each credit card until they are all paid off. Eventually, when your credit card debt is gone you can apply this method to your mortgage. Take the total amount you had been paying on your LAST credit card and add it to your mortgage payment. Make sure you indicate this payment goes to reduce your principal.
Utilizing this method does not require any additional cash. It just allocates your payments in the most efficient manor possible. Studies have shown this to be one of the most effective methods for debt reduction. The time frame to be debt free including your mortgage is between 7 - 10 years on average.
The key point to remember is - it all starts with you ending your credit card spending. If you continue to charge items this plan won't work and in all likelihood you will remain in debt your entire life.
Joseph Maistickle - Passport To Wealth - I am part of the Mentors 4 U Team. We are a highly recognized support group that trains people new to Passport To Wealth how to market the internet for free and earn money online.
http://www.duplicatemywealth.com
http://www.wealthworkingfromhome.blogspot.com
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