Two important New Year’s resolutions for many Americans – lose excess weight; lose excess debt.
States John Ulzheimer, president of Consumer Education with SmartCredit.com and contributor at the National Foundation for Credit Counseling, “’Getting out of debt is more strategic than simply writing a check to your creditors. You can save hundreds or thousands of dollars by prioritizing your debts. You can also get the benefit of a higher credit score by being smart about what you pay first.’”
Following, from Ulzheimer in an article on www.wxyz.com (ABC-News) are some helpful ideas to help you reduce your debt this year.
- Make at least your minimum payments on all of your bills, every month. Pay as much as you can and never skip a payment.
- Pay off those retailer cards first (i.e. Nordstrom, Penney’s), since interest on those cards is often 10-12 percentage points higher than on such bank cards as Visa or MasterCard. He adds, “’…by paying off retail cards, you’ll also improve your credit score because you’ve lowered the number of cards with a balance and the infamous “debt utilization” percentage – both of which are very important in your FICO scores.’”
- You may consider temporarily stopping contributing to your 401K and IRA until you have paid off (or down) your credit card debt. The amount you are earning in “gain” is probably not as much as you are paying in interest.
- Do not pay off installment debt before credit card debt. Rates on auto, home and student loans are normally much lower than credit card balances; you are also likely getting tax advantages from your mortgage and student loans.
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