Key to Success: Organizing Your Debt

The staggering amount of revolving debt in this country affects everybody, but what can be done about it? The total countrywide credit card debt amounts to over $7000 for each man, woman and child in the country. Recent statistics from the Federal Reserve, the agency that keeps track of money in the United States, shows that Consumers owe more than two trillion dollars on their bank cards.

Here are several suggestions that should help you get a head start on managing your debts:

Organize your bills - Take stock of every credit card or other revolving obligation that you have.  List your debts  according to the interest rate, from highest to lowest, and make a note of how much you owe on each one.  Knowing the rate of interest on your debts is important; it signifies the cost of continuing to owe money to that creditor in particular.  You want to pay down your debt by clearing off the loan with the steepest rate as soon as possible.  Pay as much as possible to the lender with the highest rate and make minimum monthly payments to the others.  When the highest interest debt is gone, repeat with the next one on the list.

Discuss lower interest rates - Call your creditors and ask them if they will lower your interest rate.  It is costly for credit card companies to find new customers; they would much prefer to keep you than have to replace you.  A few bank card issuers will occasionally agree to lower interest rates for their customers who are in good standing.  If they agree to reduce your interest rate, you will save a bit of money.  Be sure to keep paying in a timely manner, or they may increase your interest rate again.

Pay cash when you can - It's effortless to use a charge card; much easier than paying cash.  Start a habit of writing a check or paying with cash instead of reflexively pulling out the credit card. Think about not spending money at all if you cannot really afford it.  Keep in mind, a charge card purchase is borrowed money, not a gift.  Use your credit cards wisely, and if you cannot do that, don't use them at all.

A large part of the battle for financial freedom is getting organized.  In order to get your finances in order, you need to organize them, minimize expenses when possible and make sure that you stay out of trouble in the future.  Financial freedom is difficult work, but well worth it.

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