I had a small victory with my credit card company yesterday that brought me down to 0% interest until the card is paid off. The account is effectively closed, so I can't use it anymore, which is just fine because I wasn't planning on it anyway. :-D In honor of my triumph, here are some tips on how to save money by managing and paying down your debt.
Paying off debt, especially high-interest debt, is an important way you can save money. Dave Ramsey suggests saving a small emergency fund of around $1000 and then throw any extra money you have toward your debt. A savings account with .almost-nothing% interest is okay, but paying off that 15, 20, 30% credit card is going to save you a lot of payments in interest.
If you've never checked out what Dave Ramsey has to say or never gone through his Financial Peace University, you really ought to. That's a great place to start learning a new attitude toward money. And that's not just debt but savings as well. His program really educated me on how to manage the money you have. And if you're using those good coupons, maybe there's a little extra around to put to that credit card, above the minimum payment.
Until you are able to go through the Financial Peace University, here are a few tips to start with: Start putting every extra dollar toward you debt. Be more frugal in your spending so that there's more money paying off that credit card or student loan. The faster you're able to pay off those debts, the faster you're going to free up your money to work for you instead of Visa and Mastercard. And if you have more than one debt, focus on one at a time. Pay the minimum on everything but one. When you get that one paid off, close the account (GET DOCUMENTATION), and start paying off the next one in line.
Avoid consolidation plans or debt settlement programs. They may be a few that are solid and trustworthy, but in general, you end up worse than you started. Just buckle down and start paying them off. And for goodness' sake, if you're trying to pay off your debt, don't tack more on!
Pay attention to due dates. Credit card companies sometimes shift due dates around in order to add more fees to your account. You don't want your payment to be late simply because the credit card company altered the due date.
If you're using a bill pay program through your bank, keep an eye on those minimum payments. A while back, my credit card company did not send the correct total to my bank. It was . . . $.13 less than the actual minimum payment. They slapped me with a late fee and raised my interest rate several percent higher than it had been. You can call and complain to the credit card company if that happens, and hopefully they'll do something about it, but it's just better to be watchful. And who pays just minimum payments these days anyway?
If you have a high interest rate, call your credit card company and ask them to lower your rate. Seems simple. But why would the credit card company do that? If you suggest that you are going to transfer your balance to another card with a lower rate, they may be more than willing to drop it for you. It's hard to say how many percent they might drop it, but even a percent or two equals some savings. If the person you get on the phone refuses, ask for their manager. Be a little persistent about it. The worst they can do is say no.
Avoid consolidation plans or debt settlement programs. They may be a few that are solid and trustworthy, but in general, you end up worse than you started. Just buckle down and start paying them off. And for goodness' sake, if you're trying to pay off your debt, don't tack more on!
That's just a few tips for you. If you have any debt questions, ask me and I'll try to help. Better yet, go check out Dave Ramsey's site (see above).
Put those coupon savings to good use!!
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