“Below are the top 10 tips on how to pay off debt fast. Read on as there really is a light at the end of the tunnel!
Debt Relief.. Worry Free..
Trying to pay off a sizable debt is no picnic. It can be discouraging to pay those bills month after month while it seems like the balances are hardly moving.
Top 10 Tips to Show You Ways to Pay Off Debt Fast
It’s usually a good idea to negotiate a lower interest rate on each credit card account. With rates that can reach 30 percent or higher, credit cards can take decades to pay off. The lower the interest rates, the quicker the balances can be paid. Most credit card companies are willing to lower interest rates at least slightly if you just ask.
If asked, credit card issuers will also lower the annual fee on an account, or they may even waive it entirely. This small amount adds up over the years, and you’re better off without it.
Many credit cards come with numerous fees – late payment fees, over limit fees, and cash advance fees – which can pack hundreds of dollars onto your balance each year. It’s first necessary that you become aware of all the potential fees associated with your credit cards and do your best to avoid incurring them.
While cash advance fees are not likely to go away, many credit card issuers will remove late fees and over-the-limit fees if you do not consistently incur these. All you have to do is ask.
If you have gone through a period where you had difficulty paying on a particular account but have since paid at least the minimum due for several consecutive months, a credit card company may be willing to remove all or most of the late fees that were charged. This can reduce your total balance due by a few hundred dollars, depending on the particular situation.
To successfully pay off debt, it’s essential that each credit card is paid on faithfully every month. Each statement will list a minimum amount due, but it’s best to pay more than this each month. Obviously, the more you can pay monthly, the quicker the balance will be paid off entirely.
At the same time, it’s important to avoid taking on new debt. Credit card use should probably be stopped entirely while paying off accumulated balances. You may choose to keep the cards for some future time, or you may need to cut them up to eliminate the temptation.
It can be very helpful to minimize your expenses in other areas and apply the money saved to your credit card payments. For example, you may decide to stop eating at restaurants for the next few months and put the money you would have spent toward paying down a credit card. Expenses like magazine subscriptions, add-ons to your telephone or cell phone service, and automatic car washes can add up quickly. Eliminating these extras for a short time can greatly reduce your credit card balances.
It may be possible to negotiate a lower pay off amount with a credit card company. Many companies will accept around 20 percent less than the total balance due in a lump sum “settlement.”
After paying off a credit card in full, it’s important to take the amount of money you have been paying each month and apply it to another credit card. This approach is sometimes called “snowballing” and will help you pay off the other cards faster….. More at How to Pay Off Debt Fast – Top 10 Tips to Pay Off Debt Fast…
I thought that it had some great points worth noting, so I’m posting it here and adding some thoughts to it.
A major league pitcher dreams of throwing a perfect game. High schoolers eying the Ivy League study furiously in hopes of earning 2400 on the SAT. Meanwhile, Chris Peplinski is pursuing his own brand of flawlessness: an 850 credit score.
The 37-year-old stay-at-home dad from Rogers, Ark., has already nabbed 813 on the FICO scale, the credit scoring system most lenders use in sizing up potential borrowers.
That ranks him above more than 82% of Americans and comes with a big payoff: It entitles him to ultralow rates on loans, saving him tens of thousands of bucks over a lifetime.
[***A lot of people don’t seem to see the point in having good credit until they go to buy a car or a home and can’t qualify for what they want. The point here is that one of, if not the most important reason, to get and maintain good credit is all of the money you’ll save over the long haul.***]
Nevertheless, Peplinski won’t be satisfied until he hits the maximum: 850. Why? “Your credit score tells a lot about you,” Peplinski explains. “A high score means you’re responsible and in control of your life. You’re trustworthy.”
To reach his goal, Peplinski voraciously reads up on every element that goes into a FICO score, checks his number every three months, and tweaks his behavior to eke out every possible additional point.
Two years ago, he took out a car loan even though he and his wife, Chrissy, had the cash to buy their wheels outright. He figured that adding to his mix of credit might boost his score.
In spite of Chris’s best efforts, landing an 850 may be a quixotic goal — only about 0.5% of Americans manage it, FICO reports. “The 850 score is kind of like a unicorn,” says John Ulzheimer, a credit scoring expert with Credit.com who used to work for FICO. “Everybody talks about it, but nobody’s seen it.”
The reality is that you don’t need to catch the unicorn to catch the best rates. But adopting some of the habits of Peplinski and other members of the 800 club can help you improve your own score.
[***This is an excellent point. To have good credit you don’t need an 850 credit score. Typically anything over a 720 is considered “A” credit and will get you the best rates and terms available. And whether you fix your credit yourself or you have a credit repair company do it, its very achievable to have a credit score of 720 or higher.***]
And that can translate into real money: On a $300,000 30-year fixed-rate mortgage, the most credit-worthy borrowers will pay $14,200 less than those one tier below, $25,600 less than those two tiers below.
[***Here’s a great specific example of how much money you can save and have to use in other areas of your life, just by spending a few hundreds dollars to get your credit fixed, if it needs it.***]
FICO, the Minneapolis company that produces the scoring model, divulges the five factors that determine your magic number — your payment history, the amount you owe on credit lines and loans, the length of your credit history, how much new credit you’ve applied for, and the types of accounts you’ve had — plus what percentage of your score each factor represents.
But as for exactly how many points you’ll gain or lose for, say, taking on a mortgage, being late on a bill, or charging credit cards up to the max? That’s proprietary information: “It’s a black box,” says FICO spokesman Craig Watts.
Mystery feeds obsession. Much the way fans of TV’s Lost met up online to postulate theories on the show’s ending, some credit score aficionados passionately debate their hypotheses on message boards like the FICO Forums at myfico.com. Others use themselves as guinea pigs to discover which moves will nudge a score up or down.
While most people could tell you their number only from the last time they got a loan — if at all — true FICO fiends know their score as well as they know their spouse.
Of the score strivers MONEY interviewed, most check their score obsessively, at least every few months — at a cost of $50 or more a year. They also fixate on their credit reports, upon which the scores are based.
[***Don’t worry, you don’t have to be this interested and involved in your credit to have a great credit score. Its actually not that hard to get and keep great credit.***]
Leland Lim, a 41-year-old doctor from the Bay Area, is vigilant about scanning these for errors that might drag down his number. “It took me three years to get a derogatory entry on one of them corrected,” says Lim, who now earns an 806.
As for what makes an 800-plus score, these self-made experts basically say the same thing FICO does: Payment history is the single most important factor.
[***Bingo! Pay your bills on time. Do this with every bill, every month and you’re most of the way there to keeping a great credit score.***]
“I have this fetish about paying bills as soon as they come in the house,” says Dick Husemann, 66, a retired Air Force officer from Wilmington, N.C. He and his wife, Brenda, 69, attribute their high scores — matching 818s — to the fact that they’ve never missed a credit payment.
The Husemanns also never charge more than 10% of their credit limit. They’re not alone in that; most score enthusiasts aim to keep a low “utilization ratio,” or the amount they owe compared with the amount of credit available to them. FICO verifies that a low ratio can help your score.
Chris Peplinski used his knowledge of this principle to help his wife boost her number. When they met seven years ago, Chrissy’s credit cards were maxed out and her score was a low 466. (Today he jokes: “I tell people when they’re dating someone new, ask about your date’s credit score!”)
Chris helped her get on a repayment plan. A sales manager for General Mills, Chrissy now has tons of available credit she’s not using and a score of 786. Chris occasionally applies for additional credit cards to goose the couple’s credit lines further, even though he knows the FICO model will ding his score in the short term for opening a new account.
That kind of gamesmanship is all part of the quest for 850. With lenders now routinely closing inactive accounts, Lim rotates all his credit cards into circulation so that he’ll continue to have a lot of available credit to figure into his utilization ratio.
[***This is a very good point. With the economy being what it is, many lenders are pulling back the lines of credit to consumers. So, it’s a great idea to regularly use your cards in order to keep them active. The key here is to use them, but pay them down each month so that the balances stay low.***]
But because his charges also affect that ratio, a few months before applying for a loan, he stops using the cards or pays them off before the statement is generated. That way, he says, “my score jumps a bit” — just in time for the lender to see.
The 800 club members are also conscious of their mix of credit.
Lim became interested in the scoring process two years ago while refinancing a home-equity loan into a home-equity line of credit. Having heard that revolving debt could affect a score more than an installment loan, he studied up.
His research revealed that HELOCs are not considered revolving debt in the FICO model. (The scoring firm confirms.) And remember that car loan Peplinski took out even though he didn’t have to? He did it because FICO favors those with a variety of credit types, such as mortgage, credit cards, and auto loans.
“I probably paid $100 in interest,” he says. “But it was worth it because we raised our credit scores by 15 points.”
[***If you don’t even know what your credit looks like or what your scores are, then I suggest you get a copy from all three credit bureaus and see what your situation is. Check out annualcreditreport.com. If you haven’t looked at your reports in a year or more, then you can get them for free.***]
[***If you know your credit needs work, then I suggest you either fix it yourself with the help of a credit repair software like Credit Repair Magic or get a credit repair company, like Sky Blue Credit Repair, to do it for you. Either way, get it fixed. It’ll save you thousands of dollars and make you life much easier when you do need credit.***]