Want to know what the big moneymaker
is for credit card companies?
Fees (read: your money). Last
year, 31 percent of the industry's profits came in the form of late-payment fees,
over-limit fees and the like.
If you are like the average American family, your
total credit card debt is around $8,100. If you were to stop charging altogether
and pay only the minimum amount due on this amount, it would take about 30 years
to get rid of it.
No one wants to hand over cash to the credit
card companies, but by paying only the minimums or falling behind a couple of
months here and there, you are lining their pockets with profit and limiting your
opportunities for enjoying life.
Bankrate.com to the rescue.
Use the "Payment push plan" to methodically dissolve your debts. Here's
how it works.
1. No new debt
Put away the credit cards; borrowing is no longer an option.
Even when you know you deserve something, you can't have it until you can afford
to pay cash for it.
a head game
A daily affirmation helps to program
your mind for success; post this on your bathroom mirror: "By living frugally,
we will have the cash necessary to pay off our debts in ___ months instead of
___. The $______ we save in interest will be put into savings so we will always
have enough to pay the rent and weather any lean periods in the future."
Check out this calculator
to determine how quickly you can be debt-free and how much you'll save in interest
fees. Use the facts to write your bathroom-mirror mantra.
Prepare a debt repayment schedule
Use our debt
repayment worksheet. Include columns for the name of the debt, balance due,
interest rate, current payment and "Payment Push" period.
the debts by interest rate, with the highest one on top. Add a line under each
debt to describe how you're going to fund the "Payment Push."
"Payment Push" gets applied to one debt at a time: Continue to make
the same monthly payments on all debts except the one getting the "Payment
4. Start at the top
Apply the "Payment Push" strategy to the debt on
the top of the list: All extra, available cash is used to pay down the debt with
the highest interest rate, first. That includes raises, bonuses, belt-tightening
and that $20 bill that unexpectedly popped up.
hard at the rest of them. When the first debt is paid off, use the cash that is
freed up to pay down the next debt on the list.
on the lookout for new ways to cut costs and bring in more money. The sooner a
debt gets paid off, the sooner you can push hard at the next one on the list.
(Looking for some cost-cutting strategies?
Check out these great
tips for living frugal while still enjoying life.)