Runaway Checkbook

 

Loans & Credit Cards

 

This section will help guide you through paying off loans and credit cards.  Ideally, you should be able to payoff all loans (except a mortgage) and credit cards within FOUR years; otherwise, you have a very serious debt problem. 

 

You should have collected all your loan and credit card information under the "How to Get Started" section.  You will need that data now.  You will also need your "Spending Plan".

 

Take each loan you have that will NOT be paid off within 4 years, and calculate the amount you would need to pay monthly to pay off the remaining balance within 4 years.  You may need to contact your lender to obtain this amount.  Do this for each loan and credit card.

 

Compare these amounts with the amounts on your spending plan for each loan and credit card.  If the total of the monthly amounts for all loans and credit cards on the Spending Plan is less than the total for all the amounts calculated in this section, then you have a significant debt problem.  See if you can reduce the monthly Cash amount on the Spending Plan so you can increase the amounts for the loans and credit cards.  If you can, then make those adjustments in the Spending Plan.

 

Try to contact your lenders to see if they will renegotiate your interest rates on your loans.  Many will if you cannot afford to make the payments.  Many credit card companies will negotiate lower rates, but you have to be persistent.  Sharing your Spending Plan with them might help as well. 

 

Once you have finalized your Spending Plan as to the Loans and Credit cards, take the total monthly payments from the plan, and apply that total to the loan/credit card with the highest interest rate first, and pay the minimum amount due to the others.  This may require you to make this calculation each month.  Loans typically have fixed payments, but credit cards do not.  So this step typically applies only to the credit cards.  Once you pay off the highest interest rate credit card, then repeat the steps with the credit card with next highest rate until all credit cards are paid off.

 

YOU ONLY NEED ONE MAJOR CREDIT CARD.  CONTACT THE OTHER CREDIT CARD COMPANIES AND CANCEL THE CARDS.

 

You should never carry a balance on a credit card.  This is extremely expensive debt.

 

CREDIT CARDS ALSO CAUSE YOU TO SPEND MORE MONEY THAN IF YOU PAID WITH CASH.  FORGET THE AIRLINE MILES!!!

 

Do not borrow money to buy a car, furniture or anything else.  If you cannot pay cash, then you cannot afford it.