Resolving to get out of debt in 2011? The solution is on your statement
If your New Year's resolution is to get out of debt, you now have a powerful tool at your disposal: your credit card statement.
Most cardholders have probably noticed by now that their credit card statements now include a warning noting how long it will take (and how much it will cost in interest) to pay off your credit card debt if you only make minimum payments.
Next to that information you'll also find a figure that shows how much you'll have to pay each month to be debt-free in three years. And that's the key to succeeding with your 2011 resolution.
Step One: Stop adding to the balance. For any cards on which you carry a balance, put them in a safe place where you can't use them easily (a safe deposit box, for example, or in a baggie frozen in a bowl of water). If you are using a card to pay any regularly recurring bills, cancel the autopay so you won't have any new charges going on the card.
Step Two: Set it and forget it. Set up automatic bill payment so that the 3-year payoff amount is transferred from your checking account to pay your bill on the due date.
Step Three: Get help if you need it. If you are not sure you can commit to stop charging and make that three-year payment amount each month, then look on your statement for the contact information for credit counseling help or visit Credit.com. Set up a free consultation with a counseling agency. A pro will help you review your budget to see whether there are changes you can make to stick with the plan, and if not, whether a Debt Management Plan may be an option. With a DMP, the agency will put you on a three- to five-year debt payoff plan, often at reduced interest rates.
If it turns out you can't follow the three-year payment plan on your statements, and a DMP is not an option because you have too much debt and/or too little steady income, then your best bet is to make an appointment with a bankruptcy attorney for a free consultation, and possibly consider debt settlement as well.
This may sound like a simplistic approach to digging out of debt. Of course, life will intervene with surprise expenses and financial challenges. But it can really work if you're motivated, and stay that way.
Focus on how nice it will be to celebrate New Year's Day 2014 debt-free. It will be here sooner than you think.
Most cardholders have probably noticed by now that their credit card statements now include a warning noting how long it will take (and how much it will cost in interest) to pay off your credit card debt if you only make minimum payments.
Next to that information you'll also find a figure that shows how much you'll have to pay each month to be debt-free in three years. And that's the key to succeeding with your 2011 resolution.
Step One: Stop adding to the balance. For any cards on which you carry a balance, put them in a safe place where you can't use them easily (a safe deposit box, for example, or in a baggie frozen in a bowl of water). If you are using a card to pay any regularly recurring bills, cancel the autopay so you won't have any new charges going on the card.
Step Two: Set it and forget it. Set up automatic bill payment so that the 3-year payoff amount is transferred from your checking account to pay your bill on the due date.
Step Three: Get help if you need it. If you are not sure you can commit to stop charging and make that three-year payment amount each month, then look on your statement for the contact information for credit counseling help or visit Credit.com. Set up a free consultation with a counseling agency. A pro will help you review your budget to see whether there are changes you can make to stick with the plan, and if not, whether a Debt Management Plan may be an option. With a DMP, the agency will put you on a three- to five-year debt payoff plan, often at reduced interest rates.
If it turns out you can't follow the three-year payment plan on your statements, and a DMP is not an option because you have too much debt and/or too little steady income, then your best bet is to make an appointment with a bankruptcy attorney for a free consultation, and possibly consider debt settlement as well.
This may sound like a simplistic approach to digging out of debt. Of course, life will intervene with surprise expenses and financial challenges. But it can really work if you're motivated, and stay that way.
Focus on how nice it will be to celebrate New Year's Day 2014 debt-free. It will be here sooner than you think.
Learn about changes coming to commenting