Repair Your Credit Profile

In a perfect world, none of us would have to rely on credit cards or loans.  Everything would be paid in cash.  In our parents’ day, they neither wanted nor relied on credit.  If they couldn’t afford it, they wouldn’t buy it.  Today is different, however, and the economic recession is a direct result of sub-prime mortgages and unpaid credit.  If you owe money on your credit cards, you may be asking:  “When will I be debt free?”

There is a method widely used today that can offer you the opportunity to achieve a debt-free life.  It is called the Debt Snowball.  It has not only been recommended by experts in the financial field, but it has helped many individuals who have been drowning in debt.

How does it work?  The Debt Snowball is a method by which you begin to pay off those credit cards or loans with the highest interest first.  In order to begin the process, you have to make a list of all debt by interest rate.  Then depending upon your expenses, you would ascertain how much money you can put aside to begin paying off the debts.

For example, let’s assume you have four credit cards.  List the one with the highest interest rate first, then the next highest, and so on - with the last item having the lowest interest rate.

The next step is to take the extra money from your budget and apply it to the first high interest rate card.  So it would be the minimum payment plus the additional money you’ve put aside.  Then only pay the minimum on each subsequent card that’s on the list.

Once you have paid off the first high interest rate credit card, proceed to the second high interest rate card.  Apply the same method by paying the minimum plus the additional money you were adding to your first card.  Continue to pay the minimum on the third and fourth credit cards.

After you have paid off the second credit card, continue with this method on the third, and then the fourth.  You will find that with each credit card, the amount you pay will continue to grow in size.  As long as you maintain that initial amount taken from your budget, you should be able to pay off each card in an expeditious manner.

Why pay off high-interest credit cards first?  According to experts, there is more money to be saved by decreasing the debt that, under normal circumstances, would continue to grow due to the high rate of interest.

Many people have used the Debt Snowball method and have achieved a debt-free life.  However, it will take determination and motivation in order to faithfully execute this method.  High interest rates are the bane of our society.  By taking a proactive stance and a commitment to pay off your debt, the weight you’ve been carrying will be lifted.  Then, you can finally cut up three of the credit cards – keeping one for emergencies only - and pat yourself on the back for a job well done.

Technorati Tags: debt free, debt snowball, live debt free, pay off debt

Technorati Tags: debt free, debt snowball, live debt free, pay off debt