Supply Information On Defeating Credit Card Debt
Synopsis
If a person is ever to be a successful investor it is essential that they first eliminate credit card debt. Interest rates charged on credit cards are very high and absorb money that could otherwise be invested.
About Charging
In order to eradicate a credit card debt it is first necessary to ascertain the exact size of the debt To evaluate the size of the debt all financial documents should be gathered together and the outstanding balances should be recorded together with the minimum amounts require to service the debt and the annual fees charged on the credit card should also be noted.
Attention then needs to be given to determining the total income after tax and the outgoings also need to be compiled and subtracted from the income to determine what is available to service the debt and any remaining cash should be used to reduce the outstanding balance on a chosen debt.
Should it appear that there are insufficient funds to meet debt repayments and reduction then it is necessary to look at two things.
Firstly it would be important to track spending accurately to see it would be possible to reduce spending in order to free up extra cash such as reducing spending on dining out. Secondly it may be necessary to earn extra income in some way.
There are two principal ways to use the surplus cash to work to debt eradication. Disciplined people can get ahead faster if after making all necessary monthly payments on all debts the surplus funds are then used to reduce the debt which has the largest interest rate and continue to do this each month until the debt has been paid off in full and then the same method applied to the second highest rate.
The snowball method is very popular and works in a converse way. With the snowball method after paying all monthly debt payments the surplus cash is used to repay the smallest debt and once that small debt has been eradicated the next smallest debt is paid off. There is a psychological benefit to employing the snowball method.
