Interesting idea from Clark Howard for those with credit card debt. If you can only pay the minimum... - and to get rid of it faster - is to make a separate payment every 14 days to the credit card company. Mark your calendar every 14 days and write that check or send your online payment that day. Making a payment every 14 days equals one extra month's payment you've made at the end of the year. Work these payments around your statement cycle to avoid paying lates fees. Here's an example: Say you owe $3,500 on a credit card and you are only able to pay the $70 minimum payment, it would take more than 30 years to pay it off. But if you split it up and paid $35 on May 14th and $35 on the May 28 due date, and you kept making a $35 payment every 2 weeks, you will pay off the card in less than 7 years. He says it works because the interest is charged daily and the bi-monthly payments off set that. Small at first but as time goes on, it really helps. He also says that you must keep paying the same amount you start with even though the cc companies will decrease your minimum as the balance gets smaller...
I have a similar strategy, and I also increase my total payments by $5 per month. For example, let's say I have 3 cards, and the minimums are $10, $50, and $100. (I actually pay a bit more than the minimum, but you get my drift.... ) So, I'm sending a total of $160 monthly ($80 biweekly) to the 3 cc companies. I send $80 ($5, $25, and $50), then 14 days later I send another $80. Then the following month, I add $5 extra to my total of cc payments for each biweekly period. ($5, $25, and $55) I actually add the extra $5 to the cc with the highest interest rate, btw. And the next month, I increase that again by another $5, and so on.... This is good for me, because (1) I'm making a very small, almost unfelt, increase every month to my cc payments, AND(2) I begin to make a very sizeable dent in my balance very quickly. I have already cut out a big chunk of my balances, and I've only been doing this for a few months. I have an Excel spreadsheet for all of my credit cards which calculates interest, fees, total debt load, balance-to-limit ratios, etc. I built it so I could "play" with all of the variables, such as paying smallest balance first vs. highest interest rate. (Highest interest is definitely the way to go, although smallest balance feels psychologically better!) I could have my credit cards all down to zero within 2 years if I stick to my schedule, and charge little or nothing to them over the next 2 years. But of course, I will keep them hovering at about 5-10% credit limits used...so as to get my scores up. I learned that thanks to Creditnetters. Thanks, Future1966
Here is my method, if the finance charge increases from one month to the other, I increase my payment by $100. I also make large payments, usually 10% of the line, creditors must love my methods, I keep getting teaser rates or line increases on a regular basis. I am up to over $150,000 in lines. www.creditsense.com
LBROWN59, I think I like your way much better. I'm going out of my mind making sure that everyone gets paid(cc's,cable,utilities,etc) once a month. I think I would be downright nutty if I had to remember twice a month. LOL LOL
Any extra you pay, be sure you pay it to whoever has the highest interest rate in order to get the maximum mileage.
Totally agree. This is vitally important if you owe to more than one card, pay the minimum to your lower interest cards and concentrate on paying off the highest rate card. www.creditsense.com
I pay twice a month, because I get paid twice a month. If I got paid weekly, I'd be paying 1/4 weekly (with even more benefit). I use my online banking billpaying system...for free!
cfand3boyz | 128 posts since Mar 2002 152.163.204.199 | 05.15.2002 @ 13:21 LBROWN59, I think I like your way much better. I'm going out of my mind making sure that everyone gets paid(cc's,cable,utilities,etc) once a month. I think I would be downright nutty if I had to remember twice a month. LOL LOL ======================59================= Reply to cfand3boyz : I called all my card companies and had the due dates changed to the 25 of the month. I mail the payments on the first day of the month.This allows about 3 and one half weeks for the payments to get there. If you pay the min. pmt. plus the interest the entire min. payment goes to reduce the principlal every month and your orginal balance never increases. Another thing I do is write the checks for the bills every 4 weeks instead of each month. Also all checks are written 4 weeks in advance and put in an envelope for each of the bills. When it comes time to pay the bill I already have the check ready and waiting in the envelope. At times I will have 2 checks to mail when it's time to pay a bill thanks to my 4 week schedule instead of a monthly routine.
Quicken is a good tool to help remind you of due dates. On the main page you can select recurring bills, and how far in advance you want Quicken to give you a reminder.
