Monday, January 30, 2012

3 Steps To Get Out Of Credit Card Debt

Gerard Cutting Up His Credit Cards
Fortunately, we do not have any debt. However, before we were married, Gerard had lots of credit card debt that I didn't find out about until we were engaged and were applying for a loan to buy a house! I was shocked and actually considered calling off the engagement. He assured me that I could handle all the money so we forged ahead. We paid off his credit cards with money from his investments and from then on, he just used his Discover Card. It was nice we were able to pay them all off right away; however, many people are trapped and can't do that. That is why I thought I'd share this post with you that I got from our sermon notes on Pastor Dan's series, "Four Steps To Financial Fitness." Here are the three steps you can use right away to get you out of credit card debt:
  1. Stop acquiring new debt. If you don't have the cash for it, don't buy it.
  2. Save a little from each pay to establish an emergency fund of at least $1,000 to cover unexpected expenses such as repairs.
  3. Implement the debt snowball. I loved this! Here's how it works: First, list all of your credit card debt from the smallest balance to the highest balance. Second, Make the minimum payment on all debts, but put all the money you can toward paying off the smallest debt first. Third, when the smallest debt has been paid off, roll over the amount you were paying into the next largest debt, repeating until all your debt is repaid. 
For example:
       credit card                total Balance           Minimal Payment       New payment
Kohl's                                $ 150                            $15                                   
Macy's                              $ 250                            $10                          $ 25 
Sam's Club                         $ 500                            $ 75                          $100 
VISA                                 $1500                           $ 90                          $190 
Car                                    $4000                           $210                         $400 

Getting rid of your debt using these steps won't happen overnight, but it will certainly move you in the right direction and as you see some paid off, it will motivate you to carry on. "Success breeds success."
Before looking for stocks or mutual funds to invest in, ask yourself the question, "Do I have any consumer debt?" If so, you have a wonderful investment opportunity.
  • It's guaranteed.
  • It's tax free.
  • It's immediate.
  • It offers a high rate of return on your investment.
Pay off your credit card debt!

Are you in the 46% of Americans who have credit card debt? If so, I wish you success in paying it off by following the above steps I have shared here.

Source: Taken from Jan. 22, 2012 sermon notes by Pastor Dan Barfell at Parma Heights Baptist Church. Follow the link to listen to the whole sermon.

Share this:


Lin said...

You can cut up the cards, but don't close those accounts! Open accounts that have no balances are needed to keep your credit rating up high, believe it or not. Sounds crazy, but they want you to have been approved, but not use, for credit.

We rarely have credit card debt. There is typically a small balance each month that we pay off. If you order online or have a kid at college, I don't think there is a way to avoid that because so much is transacted with a credit card.

Good ideas for paying off your debt!

Rebecca Mecomber said...

Good post! Debt is a huge problem for New Yorkers. Expenses are sky-high and jobs are pretty scarce. We sure could use some prayers!

BeadedTail said...

I agree with Lin in that the accounts need to stay open for credit rating purposes. We don't have credit card debt but I know how easy it is to accumulate so great advice!

Anonymous said...

Hey There. I found your blog the usage of msn. This is
an extremely well written article. I'll make sure to bookmark it and return to read extra of your useful info. Thank you for the post. I'll certainly comeback.

Here is my site paleo produkte

Post a Comment