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Eliminating Debt
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One of the best ways to eliminate debt is to systematically pay off each debt based on the interest rate. You pay off the account with the highest interest rate first. Once paid in full, you take the amount of the monthly payment you use to make on it and apply it to the card with the next highest interest rate. You continue in this same fashion until you pay off all of your excess debt.Another tip would be to contact your credit card companies respectively and ask them to lower your interest rate. If you have a satisfactory history with these creditors, this should be fairly easy. Although some creditors will not budge on their rates, most will lower them for customers with good payment histories.
You could also do a debt consolidation refinance to pay off and eliminate your debt. There are many advantages to using the equity in your home to pay off your debt. Number one the interest of the mortgage will be tax deductible. The second advantage is that you will have a much lower total monthly expense expenditure each month. By saving money each month you will be able to apply more money towards your mortgage payment each month and pay your mortgage down much quicker.
After you have paid off a credit card you do not want to stop using it entirely. One of the many factors involved in maintaining a high credit score is the ability to wisely us the credit you have been granted. In other words, if you spend $100 on a credit card each month and pay off the entire balance once you receive the bill you will demonstrate your ability to live within your means, and as a result will see your credit scores improve. This does not mean that you need to spend more than you normally would just to improve your credit rating. You can use charge daily expenses to such as gas, groceries, etc to your card and see the same benefit. Just be sure to pay off the balance each month to avoid getting back into debt.
When you consolidate debt using home equity it is important that you not continue to charge up the credit cards. Trading unsecured credit card debt into a debt secured by your home should only be done if you are confident the credit cards will not be charged back up. If poor spending habits persist and you squander your home equity you could end up without money... or a home.
One common debt elimination program is to pay extra every month toward your smallest debt. Here is how it works-
Stop using your credit cards and lines of credit.
Add up all of your debt, including mortgage, home equity loans, car loan payments, credit cards, and any other loans.
Determine how much extra you can pay every month above that total, to come up with your new monthly debt payment amount.
Every month, pay the minimum toward all accounts except the smallest.
Pay the remainder of your new monthly debt payment amount toward the smallest loan.
The amount you are paying above the minimum due on that smallest loan will increase every month until it is paid off.
Now move on to the next smallest loan. Take all of the extra above minimum payments in your new monthly debt payment amount and apply it to your new smallest loan.
Continue until all of your loans have been paid off.