The Fastest Way To Eliminate Multiple Credit Card Debt

According to a poll from usnews.com, 70% of American consumers are in debt. The question is, are you one of them?

Many consumers are now deep in debt, with not just one credit card, but with multiple credit lines. The sheer weight of it all are getting debt ridden credit card holders seeing doom as they struggle to keep up with monthly minimum payments. If you’re feeling hopeless about your debt, there’s still a way out of it.

The fastest way out of multiple credit card debt is by setting up a system. Call it whatever you like, but this system definitely works for everyone. Here’s what you need to do:

1. Set aside a certain amount of money to pay off the minimum balance of each credit card debt. If you can set aside more, then that would be better.

2. Check each debt you have and write down the amount due, and the minimum amount required.

3. Once you have your list, go through each one and calculate the loan that has the least Debt Cash Strain Factor (DF).

4. You can calculate the DF by dividing loan balance over the minimum payment (Loan balance / minimum payment)

5. The debt that has the lowest number is the one you should pay off first. Let’s call it “Debt #1”.

6. Pool all of the money you have set aside for the minimum payments of your credit card debts and pay it all to debt #1. Don’t worry about not paying your other credit card debts, you will get back to them sooner than you think.

7. Since you have paid off more of debt #1, this will make your monthly interest payments lower and you will quickly be able to pay it all off.

8. After paying off debt #1 completely, use the same amount of money (or more) you set aside every month to pay off debt #2.

9. Repeat the process until you pay off all of your debts.

Paying off only the minimum balance will take you forever to get rid of that debt. This is because you’re only paying the interest and not putting anything in the principal. With this system, you’ll be paying off the principal with each loan you decide to pay off first, ridding you of the loan burden one by one.

And if you’re really deep into financial trouble and you’re not able to shell out the money needed for minimum payments, that’s the time when you need to make significant lifestyle changes such as cutting down on expenses.

One thing to remember with ridding yourself of debt is to set up a system, and forget about it. Leaving your mind open to positive influences and a money generating mindset.


Clearing Debt the Sensible Way

The economic crisis by now has impacted everyone and the majority of people have way too much debt. While it will take some time to clear all this debt, there are ways to reduce what the debt is costing you.

If you are really interested to clear debt as soon as possible then you may just want to follow these tips to reduce the costs. You may be on your way to that perfect credit score rating sooner than you think.

First you must assess all of your debt to see which is costing you the most. It would seem obvious that the debts incurring the highest rate of interest are the ones you should try to reduce the fastest. Often this is credit card debt, which is usually closely followed by debt on that new flat screen TV or nice lounge suite. Analyze your credit card bill and your other loans.  Ascertain which one is costing the most in monthly interest and work at trying to pay that off quicker.

If you are not in a position to make additional payments on any debts, there are ways to still reduce what you owe. Instead of a lot of small debts you should look to consolidate them into one debt. It may seem obvious, but in their desperation to clear their debt, many people look past the obvious; ensure that the cost of the consolidated debt is not more than the total of all the small individual ones. If it is then consolidate only the ones at a higher rate into the debt consolidation loan and leave the others.

Although it is nice to think of the lower payment each month, this should not be the only factor to consider. Take into account the remaining period on your individual debts. Even if a debt is at a higher interest rate, it makes little sense to reduce the interest by 2% into a 36 month consolidated loan when there is only 6 months left on it right now. Rather leave that out of the debt consolidation and use the money saved on the other debts to try settling that one even quicker.

Remember that there is a cost involved in consolidating your debt – there are fees involved in the new loan and there are often penalty fees for settling existing loans early without giving 90 days notice. Take this into  account when calculating any potential savings. The cost of the debt is not only in the payment, although that will be the major factor in terms of affordability – a loan at 12% over 12 months will cost you more in interest than a similar loan at 10% over 36 months, for example. Always look at the total interest you are paying, not just the nominal rate.