Stabilize Your Current Financial Situation First Before You Invest Part 2
Now that we have looked at our budget, we should be able to see where our money is going, and find some ways of stretching it to find extra cash to either pay off existing debt, or invest.
If you are like most American households, you’re probably carrying a fair amount of consumer debt, spread out in so many ways you probably think that it is either no big deal, a little bit here, a little bit there, or you’ve started to realize from your budget that all those little minimums are starting to add up to one big debt burden you’ll never get out from under. So, what can you do?
DEALING WITH CREDIT CARDS
High interest credit cards drain any discretionary income you have coming in. Cut them up and pay them off.
If you have high interest outstanding loans, pay them off as well.
Try to be savvy with the credit card companies. See if you can exchange the high interest credit card for one with lower interest. You can even approach your credit card company and tell them you have had a better offer. Ask if they are willing to match the APR, or at least lower your existing one substantially.
Otherwise, transfer your balances to the new card and cut up the old one once you know the transaction has gone through. Just be sure to keep up your payment/s with the existing credit card until you are sure that the balance transfer has gone through.
Do be careful, however, about cards with a low introductory rate. Make sure that you know when it is, and make a concerted effort to pay it off before that time, so you are not hit with an APR which in some case might be greater than the original.
Refinance high interest loans with loans that are lower interest. You may have to use some of your investment funds to take care of these matters, but in the long run, you will see that this is the wisest course of action.
Paying off the credit cards
Once again, look at all your monthly credit card statements.
Make a list of the APRs, and balances, and then start paying them off one at a time, starting with the biggest APR and the biggest balance.
Yes, you have a whole bunch of bills every month, but no, they are NOT all equal. the big APR and balance will cost you a lot more in the long run if you don’t nip it in the bud now.
And nip your impulsive spending habits as well.
If you do need a credit card for emergencies, carry the one with the lowest APR around with you, and again, write down everything you spend.
Also be very strict and careful with what you define as an ’emergency’: trust me, that new pair of jeans in the window on the corner is NOT it.
To continue reading this article, visit Stabilize Your Current Financial Situation First Before You Invest Part 3.
