HOW TO REDUCE YOUR CREDIT CARD DEBT?

I was watching Oprah yesterday and Suze Orman was with her talking about debts.

Imagine, in the studio in the show alone, the total debt (credit cards, housing, car loan, personal loan etc) was over RM2million. Wow! There must be only about 50 people inside the room.

We have to realise our accumulating debts and take actions to reduce it. Here are some tips.

REDUCING CREDIT CARDS DEBT

Credit Card is the highest interest bearing loan. Thus, it has to be eliminated first.

1. Rank all your credit cards with the highest interest charged. Eg No1, Bank A with 24% pa or 2% per month. No 2, Bank B with 18% pa or 1.5% per month
2. Every month, pay all the minimum requirements for all cards
3. Find extra money to pay the first card every month.
4. Once first card is paid off, pay the second highest interest rate card.
5. Repeat the action until all debts are paid off

HOW TO IMPROVE YOUR CREDIT LIMIT

• Pay more than minimum payment on each card
• Pay credit cards bills on time
• Never go over your credit limit

SPENDING ACTION PLAN

1. List down all your expenses and categorise them into WANTS or NEED
2. Circle all expenses with WANTS
3. If you have debts or NO savings, eliminate the WANTS
4. Save enough to cover for 8 months expenses
5. Decide how much you can save each month & add 20%
6. Search around for a savings Acc with the highest interest rate

So, what do you think? Does this helps you much? Let me hear what you think.

Suze Orman's Article

• Record keeping

Suze Orman's video

• Suze Orman's money mistakes you can't make