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Breaking Up Is Hard To Do
By Kristyn Hunt
For the past 2 weeks, I have written on the credit card debt and how important it is to break free of the debt cycle during the holiday season. During my last installment of “Get Your Credit Straight,” I have decided to give the last tips to getting on the path to being financially-fit.
- Put your debt in order of highest interest rate to lowest interest rate. That way, you will have an idea of how you’re going to repay the debt.
- Consider getting a second job, preferably during the holiday season. That’s a great way to get the cash that you want and everyone is hiring.
- You should consider cutting up your cards, but don’t close them! Many people are skeptical of this, because you don’t have to have your cards on your person to use them. According to LaToya McDaniel, a native of Port Arthur and currently an engineer in Austin, “I recommend cutting up and canceling your cards because it’s too easy to go in a store, give them your id and social, and get back into debt.” However, according to MSNBC financial analyst, Suze Orman, “Never, never cancel your cards! You are erasing years of credit history and your debt-to-income ration will increase, therefore making your FICO score go down even further.” In this instance, I suggest you do what’s best for you. If you honestly know that you would continue to use the cards even if you don’t carry them with you, I would close them.
- After you have contacted the creditors and set up a payment plan, please pay them on time! According to an article in the Port Arthur News, some credit card companies are raising interest rates on good customers even if they pay down their balances on time, every month. They cite that your FICO score has gone down somewhere else and therefore, they are warranted to change your interest rate because you are a credit risk. If you know that you can’t afford that month’s bill, please contact them in advance. They want to keep you as a customer, so explain the situation and set up a replacement payment elsewhere.
- Set up a budget. Programs such as Quicken are great for those who don’t know how to budget their money. The program shows you where your money is going each month.
- Lastly, don’t beat yourself up. According to Orman, everyone can get out of debt, but you must first recognize that you have a problem. You’ve told your family, you’ve told your friends and you’ve admitted it to yourself. You’ve already taken the biggest step. Congratulations! You’re well on your way to being financially fit and secure. The biggest thing is to not get in debt anymore. Use your bank check card instead of a credit card. That way, you’ll know if you can afford the purchase or not. Start a support group. You’d be amazed at how many women are going through the same thing as you, but they’re afraid to admit it. Have a Merry Christmas and an even better New Year! When I return in the 2008, we’ll start off the year with an even better and brighter outlook for your financial future!
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