Priorities for Eliminating Credit Card Debt
Ideally, a student just getting a start on life should do so with as much of a clean slate as possible. This includes in the area of credit. There is nothing sadder than seeing a person in college, who should be worried only about his or her studies, saddled with too much debt. But if you find yourself in a position where you’ve got more credit card debt than most other students, here is where you should place your priorities in getting rid of that debt.
While many people would advise you to get rid of the debt with the highest annual percentage rate first, I’d advise college students especially to try a different strategy. First, attack several of your low-balance bills and get them out of the way. This will give you an emotional boost to keep on getting rid of your credit card bills. But also, since your mind is usually on your studies any way, this makes the remaining bills–even though they’re larger–easier to keep track of.
Now that you’ve got your stack of bills a lot smaller, look at the ones with the big APRs. Using the money that you had previously set aside for the bills you’ve already eliminated, start attacking the ones with the highest interest rates. The savings on interest will help out your billfold considerably.
It’s going to be tough making the commitment and then sticking to it. But you need to stick with your payment plan until that bill is completely gone, or at worst rolled into another card.
Remember this one critical key for paying down your debt: Always pay more than the minimum due that month. If there’s ever a time when you cannot do this, because you have some other bill coming due or because it would cut into daily necessities, then you’re charging more money than you actually have.
Once you get previous debt under control, be careful not to get back in that mess again. Take a month and everyday write down every purchase your make. Some experts say that just this process of monitoring your spending will cause you to spend 20% less than normal.
At the end of that month, decide how much you can realistically spend each month for your credit card bills. Make sure your credit habits never exceed this amount. Life is too short already. Don’t shorten it further at this early point in your life by saddling yourself with too much credit card debt.
Student credit cards.com @ March 10, 2008