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Try to reduce any accumulation of new debt. Thus, do not make unnecessary purchases.  If possible put away all your credit cards, except for one to be used for emergency purposes.  Make a conscious decision to buy only necessities.  Only after gaining control of your expenses then you can reward yourself by purchasing an unnecessary item with cash, not your credit card.


Set clear and specific goals for paying your debts.  Choose a specific time to have your debt reduced to a specific amount.  Work diligently to pay down the debt.  Vague goals are more difficult to obtain than specific goals.


Begin by writing down all your debts.  List them in order with the highest interest rate debt first.  A good strategy is to pay the minimums on your lower interest rate debts and to pay as much as possible toward the highest interest rate debt.  Then, you should pay as much as possible to the next highest interest rate debt on your list when the highest interest rate debt is extinguished.  This strategy reduces your high interest rate debts and decreases your payoff time.


Frequently look for new ways to reduce your costs and expenses and for ways to earn more money.


Pay attention and Gain Control Over Your Credit Card Payments 


Review your credit card statements carefully.  Make sure that your payment arrives on or before the due date.  Do not charge for more than your credit limit.  Fees are the big income generator for credit card companies.  In 2003, more than 30% of credit card companies’ profits were from late fees and over-limit fees.


The average family has more than $9,000 in total credit card debt.  Most interest rates on cards are near or exceed 20%.  If you were to stop using your credit cards and pay only the minimum amount due on the balances, it likely would take as long as 30 years to pay off the debt.  The credit card companies have the power if you let them control the situation.  By paying only the minimums, making late payments or falling behind a few months on your payments, the credit card companies gain control and limit your abilities to pay your debts.  Falling behind one payment causes the credit card companies to request two payments and late fees when the next bill is due.  Also, many credit card companies raise your interest rates once you fall behind.  This gives them control and provides them with more profit at your expense.


Payment Reduction Strategy


 1.       No New Debts

Use only one credit card for emergency purposes.  Do not borrow any money.  Pay by cash or check for all items.  If you do not have the cash or enough in your checking account do not make the purchase.


2.        Remind Yourself of Your Debt Payoff

Motivate yourself by keeping your written goals in a place where you often will see them.  You can use a bedroom dresser, a refrigerator or your wallet.  Remind yourself that you must live within your means and only use cash if possible.  Remind yourself that the money you save will be used to get you out of debt.


3.      Draft a Debt Repayment Schedule

List your debts, balances, interest rates, monthly payments and, for loans, your payment period.  Rank your debts in order of interest rates, with the highest listed first.  Pay all extra monies toward the highest interest payment card or loan.  If more than one card has the same or very close high interest rates, a good strategy is to split the extra monies available and to put a larger amount toward the card with the higher balance.  If one of the higher interest cards has a much higher balance then pay the extra monies toward that card.


Use the online calculators to see how much you can save by applying more monies each month toward your highest interest rate accounts.  You can compare the payoff time of paying only the minimums versus applying more funds toward the higher interest rate accounts.  You will be pleasantly surprised with the results of your strategy.









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