New Years Resolution to Pay Down Debt

Did you set a new year’s resolution to pay down your credit card debt?  If so, I’ve listed a suggestions on how to tackle your debt.

One thing I want to say before we go into that is please DO NOT clear our your retirement account to pay down debt.  Given the broken social security system, you will need your retirement in the future.  Additionally, creditors cannot force you to clear out your retirement account to pay any debts, not even in bankruptcy.  So please do not wipe our your retirement to pay down your debts.

Now that we have gotten that out of the way, here is a suggestion as to how to approach your debts…

 

Step 1:

Write down all your open credit cards and debts, the balances owed, and what the interest rate is.

Step 2:

Prioritize what debts you want to pay off first.  I would suggest you pick the one with the highest interest rate since that is the debt costing you the most when you carry a balance.  Some people prefer to tackle the lower balances first before working to the high balances.  How you prioritize is up to you and what your preference is.

Step 3:

Put any extra money you have into paying down the debt.  When you pay off a card, take the money you save from not having to pay that card and use that money to pay off your other cards.

I know this all sounds straight forward, but I know it’s hard to do.  Just remember to keep at it and stay persistent.  Some other options to look into if these steps don’t work for you, you can look into debt consolidation or balance transfers.  Just be careful with balance transfers because you don’t want to have a balance on the card when the 0% interest offer expires.

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