Strategize To Pay Off Debt

There aren’t many advantages to the economic downturn, but one is that people are more focused on saving money and paying off debt. For those who’ve run up their credit cards, the average amount owed is more than $16,000.

Consumer Reports Money Adviser says now more than ever you need to put the brakes on credit card spending. The best way to protect yourself in tough economic times is to bulk up your savings and pay off your debts.

First, gather all your credit card statements. And get out the bills for other non-tax-deductible debt like your car loan. Make a list of what you’re being charged every month in interest and other fees, from the most money to the least.

It can be confusing if you’ve got balance transfer fees and cash advance fees on your credit card as well as your regular charges. Check the finance charges box to get the total.

Consumer Reports Money Adviser says once you’ve prioritized your debt, make the bulk of your payments to the one that’s costing you the most. And don’t rush to pay off a mortgage or a home equity line of credit because those are usually low interest and tax deductible.

Another move that can help you save some money: Ask your credit card issuer to lower your interest rate. In a survey, Consumer Reports found that more than 50% of people who called their credit card company to get their interest rate lowered were successful. It can help if you let them know you’re thinking of transferring your card balance to another company. Paying less interest on your credit card and eliminating your most-expensive debt first can add up to money saved.

Need help whittling down some of your expenses? Many budget software programs offer free budget worksheets online. Consumer Reports found helpful ones from Microsoft, betterbudgeting.com, and todaysseniors.com. And check out the link to Consumer Reports’ financial survival guide: http://www.consumerreports.org/cro/money/resource-center/financial-security-guide/financial-survival-guide.htm.

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