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Tips for paying off debts in 2016

Debt-credit[1]

What are your New Year’s resolutions for 2016? Is paying off your debts one of them?

It’s a chore, I know. I wasn’t able to make much progress with it until I paid off my house. First, I put that money toward paying off my credit cards. That done, now I’m working on my home equity loan, which I used to pay for home repairs, including a new roof.

In time for the New Year, CreditCards.com offers this advice to help consumers succeed in paying off their debts:

  • Ask for a lower interest rate. It’s shocking how much this works. About two-thirds of credit cardholders who asked their issuer for a lower interest rate were successful, according to CreditCards.com. Why not try? The worst that can happen is they say no.
  • Apply for a balance transfer. The best deals are Slate from Chase – no interest on balance transfers or new purchases for 15 months, and no transfer fee in the first 60 days – and Citi Diamond Preferred – no interest on balance transfers or new purchases for 21 months, although there’s a 3 percent or $5 transfer fee, whichever is greater. These are good deals for consumers who can pay the entire balance within the 0 percent timeframe.
  • Determine why you got into debt in the first place. Was this a temporary rough patch or a sign of bigger financial trouble such as consistently spending beyond your means? If it’s the latter, find ways to save money such as selling unwanted items on eBay and cutting expenses, especially recurring bills you might have forgotten, such as a premium TV package or gym membership you aren’t using.

Here are some additional suggestion to consider:

  • See what the credit unions in your area have to offer. I’m a big supporter of credit unions. When you’re a member, you don’t have to worry as much as being socked with huge fees that aren’t disclosed.  And, many credit unions offer classes in money management and planning for retirement.
  • Make a budget. While it doesn’t sound like a fun thing to do, it can help you figure out where you are financially. You’ll be more likely to be able to pay off your debts and even save money. It can help you greatly have peace of mind about your future.
  • Pay more than the minimum on your credit cards. I like the recent change in the law that requires banks and credit unions to tell you every month how much interest you’ll pay if you keep just paying the minimum. It helped me get going on paying off my credit cards.
  • Stop creating new debt. If you have a problem with compulsive spending, cut up your credit cards.
  • Rank your credit cards by interest rate. Pay off the ones with the highest interest rate first.
  • Give yourself rewards to mark your progress. Figure out milestones and celebrate them.
  • Be aware that emergencies occur. If something happens, such as your car breaks down or someone in the family has an accident, deal with the crisis. Then get back on tract.
  • Get help from a consumer credit counseling service. Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Don’t get sucked into signing up with a debt relief service. Many are rip-off frauds, such as this one that the Federal Trade Commission recently took action against. Consumers have ended up owing more money after dealing with these companies, some of which advertise widely on television.

Best wishes in your efforts to pay off your debts. It’s a worthy resolution and will add to your peace of mind as you work on it and achieve your goals.

Copyright 2015, Rita R. Robison, Consumer Specialist

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