Need to claw your way from under a growing pile of credit card debt? Try these strategies:
•Gather the paper. January is the perfect post-holiday time to collect your wits and your paperwork. Gather up all your financial documents — bills, credit card statements, insurance records — and create a filing system by category.
Store crucial documents — birth certificates, property deeds, insurance policies, wills and power of attorney authorizations — in a safe, fireproof location, such as a safe deposit box. Keep copies in clearly marked files at home.
•‘Power’ down on payments. To get a lid on debts, write down all your income and every expense, including credit card payments, dentist bills, car loans, cable TV, even the daily coffee-and-muffin habit. The key is to eliminate enough monthly expenses to come up with a “power payment.” Whether it’s $20 a week or $300 a month, it becomes an addition to your regular minimum payment on at least one outstanding debt. First attack bills with the lowest balances or the highest interest rates.
•Talk to creditors. Perhaps the simplest step to lowering your debts is to pick up the phone. Call the company’s customer service line and request a lower interest rate or help in modifying your repayment terms. If the first person you speak with can’t help lower your rate or make adjustments to your account, ask to speak with a supervisor.
•Make history. That is, a credit history. Each spouse should have one credit card solely in his or her own name to be sure each individual establishes a separate credit history. Without any repayment history in your own name, it will be difficult to get a credit card, mortgage or loan.
Also, request a free annual copy of your credit report to prevent incorrect information from damaging your credit score.
•Ask for help. This may not be the time to try to go it alone. Consider meeting with a qualified financial planner, CPA or tax adviser, even though there’s a fee involved. If that’s not feasible, take advantage of free or low-cost credit counseling available through nonprofit groups, which offer help with credit card, mortgage and other debt issues.
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