CHRIST­MAS DEBT HANG­OVER

Highfields' Own - - Finance -

WE may have long said good­bye to dear old Santa, but for many of us there is still a lin­ger­ing and un­avoid­able re­minder of last Christ­mas – on­go­ing credit card debt.

If you’ve found you flashed the plas­tic a lit­tle too much over the hol­i­days, here are some sim­ple tips to get your bank bal­ance back into the black sooner rather than later.

Rule 1: Stop us­ing your card/s

PUMP the brakes. If you’re al­ready strug­gling due to ex­cess debt, why keep adding to the prob­lem? Pay­ing for pur­chases in cash makes you stop and think: “Do I re­ally need that item”. There’ll al­ways be in­stances where you’ll need a credit card pur­chase (gro­ceries/an un­ex­pected bill) to get you through un­til the next pay day, but not chang­ing your spend­ing habits is a sure-fire recipe for dis­as­ter.

Rule 2: Pay off the high­est rate card first

THIS is a no-brainer. Make sure you put any ex­tra money avail­able into re­duc­ing the debt on your high­est in­ter­est rate card ev­ery month (but don’t for­get to pay the min­i­mum on your other cards as well). Once you’ve cleared that debt, con­tinue do­ing this on your next card and the next un­til you can say good­bye to them all.

Rule 3: The B word

YES, we know it’s bor­ing, but sit­ting down and es­tab­lish­ing a re­al­is­tic bud­get will give you a great in­sight into where you can save money. One less cof­fee a week or one less take­away meal can sud­denly give you that ex­tra cash to re­di­rect to your credit card. And, as you de­velop good spend­ing habits, you will be less likely to fall back into your “old” life­style.

Rule 4: Make ex­tra pay­ments

IF YOU can man­age to make two pay­ments each month it will dras­ti­cally cut the time you pay off your debt. By low­er­ing the av­er­age daily bal­ance, you in­ter­est charges will drop as well, mean­ing you’ll be debt-free in no time.

Rule 5: Lower that rate

IF YOU don’t ask, you don’t get. Con­tact your credit card provider and re­quest a lower rate. In a com­pet­i­tive mar­ket, you might just be sur­prised with their an­swer. A lower rate en­sures lower re­pay­ments which, in turn, will al­low you to wipe out more of the prin­ci­pal.

Rule 6: Con­sol­i­date Your Debt

IF THE amount you owe on your cards seems too over­whelm­ing, maybe con­sol­i­dat­ing your debt is the an­swer. By tak­ing out a loan (from a rep­utable lender or bank­ing in­sti­tu­tion) you can pay off all your credit cards at once and then pay one man­age­able loan re­pay­ment per month – ideally, at a dra­mat­i­cally smaller in­ter­est rate than your cards.

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