How do I get out of debt?

Question

I made big mistakes in my life. I have one maxed out $1000 credit card, another $900 maxed out credit card, another $400 maxed out credit card, and another one that I owe $400 in. How do I pay for all this and get this straight? I work two jobs and live at home. I make about $720 a month. About how long would it take? Much appreciated.

Answer 1

If you need to buy on credit, at least do it with your eyes wide open. If you're already in debt, use these tips to get out and get ahead:

* Don't get any deeper into debt. Save the credit card with the most favorable terms and cut the rest up. Put the one you saved in a safe place (not in your wallet) and use it only for emergencies (not to include a big sale at Macy's!)

* Pay more than the minimum balance. Much more.

* Shop around for cards with low interest rates, but beware of come-ons that offer a low introductory rate and then take a big jump. The Internet makes choosing a credit card easy, but be sure to read ALL the fine print.

* Move balances on cards with high interest rates to cards with lower interest rates.

* Use your savings to pay down debt. It makes no sense to earn 1 to 3% interest on your savings account while paying 12 or 15 or 18% interest on credit cards.

* Come up with a written plan for reducing your debt systematically.

* Add up all the money you spend each month on credit card payments, and think about what you could do with this money if you weren't paying it to the credit card company.

One of the best methods of systematically paying off your debts is what I refer to as the Credit Crunch. List your debts, including the balance and the interest rate for each one. Each month, pay the minimum balance on all credit cards except the one with the highest interest rate. Pay as much as you possibly can on this card each month until it is paid off. Then start paying as much as you possibly can on the card with the next highest rate, while continuing to pay the minimum balance on the others. Keep doing this until they're all paid off. This is the only time you should ever pay the minimum balance on any card.

read some important information about credit card use at: http://www.card-gallery.com/article

Answer 2

Each month you pay the minimums and although you KNOW you've got a handle on it - you are not charging your credit card or accumulating new debts anymore - it seems that you will be paying the minimum fees forever.

Did you know that HOW you pay your debts can affect how soon you will finishing paying them off - even if you keep paying the same amount for debt every month? Of course you might be able to get a consolidation loan, but if you're not eligible or are not interested then there are several other things you can do.

It's not always the easiest to figure out the mathematics, but there are three steps to quicker debt relief - guaranteed.

STEP ONE - Create a list.

List your smallest debts first followed by your largest high-interest debts (credit card) and then your largest low-interest debts (Lines of credit and taxes).

Plan to pay the minimums on all debts with these goals in mind:

STEP TWO - Small bills first.

They may not be the highest interest, but every bill that you are paying some interest on means you are usually only paying minimal amounts on the principal. Multiple debts are also a sure way to bring your spirits down. Paying off small debts first is a quick way to start checking them off - and freeing your mind.

STEP THREE - Move the payments along.

When one debt is paid add the funds to the next debt. For example, say you're making $75 payments to a small debt. When the debt is cleared add the $75 to the next debt on your list. If the next debt had a minimum payment of $100, you will now pay $175 until it is paid off. When that one is finished, take the $175 and add it to the next payment and so on.

STEP FOUR - Save the cash!

Don't forget that when your debts are cleared you have set yourself up for a better financial future. The best way to take advantage of your new situation is to use all the money you were spending on debts and start investing or saving it every month.

With this strategy your debts will clear faster meaning you will pay less interest, you will see progress as you clear small debts first, and you will not be tempted to use the funds for personal use instead of debt repayment.

It is a worthwhile goal to get out of debt. Seeing that goal come sooner and teaching yourself discipline sets you up for a brighter financial future. You OWE yourself that!

Answer 3

Your best bet would be to consult a debt councillor, You can check your yellow pages under debt management, etc. For sure, you want to try and have your loans consolidated and get out from under the thumbs of the credit card companies as their rate of interest is very high, typically in the range of 28-30 percent annually. If you are working with a debt management councillor and you have a steady job, most banks or other reputable finance institutions will work with you. But you must commit yourself to their recommendation and be prepared to cut back on your life style until you are in the clear. After that cut up your cards and don't take out new ones. Credit cards can be a useful thing but in the hand of someone who can't control impulse buying, they are a disaster waiting to happen. Good Luck

Answer 4

take the minimum payment on your bill and double it. do this till the balances are paid off. anything that you pay on a credit card balance over the minimum payment goes straight towards principle and not towards interest, so you can really chip away at the balance by doing that. how long it will take depends on your interest rate...which is probably high since you have really low credit limits...seems like you are in your early years of dealing with credit. as long as you pay at least double the minimum, you will establish responsible payment habits, pay the balances off faster and be more attractive to creditors. definitely do not get rid of the accounts. creditors look at how long you have been responsible for credit accounts...7 years is often the minimum to obtain a good credit score. i heard a great tip once...put your credit cards in a tupperware container, fill it halfway with water and put it in the freezer. that way, you have to really consider a purchase before you can just slap it on your card, and the ice won't dammage the card. keep paying as much as possible. good luck!

Answer 5

I would start with the highest interest rate card, and work on getting that paid off first. The rest maintain your minimum payments on. Once that is paid off, then start with the next highest interest and so on until they are paid. I would use my entire refund from taxes to apply toward your debt. I would cut up the credit cards and not use them again. Your in a much better spot than most, but use this as a BIG lesson learned.

Answer 6

When using the credit card, people ignore the consequences of using the card too often. Frequent use of credit card causes bills to be accumulated and worsens your credit score. Besides lowering your credit score, you also face financial burden since the interest charged is very high.

Answer 7

The first 3 answer are excellent. I would add that you might want to check with the credit card company that has the lowest annual interest rate and try to transfer all your highest rate cards to that one.

Answer 8

Umm, i'm incredibly beneficial statue of limitations in basic terms protects you while commit against the regulation (Sorry approximately that) wager what 2 crimes it does not impression? Murdering somebody (of path!) and not paying taxes... you nonetheless could pay your money owed. while you're in debt, make a funds, and make a itemizing of each dime you spend. you will locate someplace the place money is going that it would not could be.