Evan Vitale

Evan Vitale – Getting Out of Debt (Part III)

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By Evan Vitale

Our series on getting out of debt continues today by taking a look at credit card debt.

As we know, it’s very easy to use plastic; buy things we don’t really need and run up a credit card bill. While it feels good to “shop until you drop,” it certainly doesn’t feel good when the statement comes in each month.

Paying the minimum amount is only a temporary fix. Over time, the interest on your debt will bury you and, perhaps, you won’t be able to use your card again. Therefore, here are some steps on how to get your credit card spending under control:

  • The biggest step in getting your credit card debt under control is to stop using your credit card. Stop. Stop. Stop. A good rule to follow while you pay down your debt is to only use cash (or a debit card). In order words, if you can’t pay cash, then don’t buy it.
  • If your debt is serious – and a spending problem exists – cut your credit card(s) in half. This will definitely keep you from using them.
  • Create a spreadsheet and record your credit card accounts; how much you owe and how much you pay on each one each month.
  • Compare your numbers with your other living expenses: mortgage or rent; food; utilities, etc. You’ll be able to make quicker progress on reducing your credit card debt if you create a strict budget. That way, you’ll have a better handle on income and expenses and how much money is available to pay down your credit card debt quicker.
  • If your numbers don’t match up and you can’t pay more than the monthly minimum payment on each credit card, then you’ll eventually be in the red each month. The interest on those cards will continue to mount.

Next week, we’ll take a look at some options and theories on reducing and paying off credit card debt.

Evan Vitale – Getting Out Of Debt (Part I)

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By Evan Vitale

We all have some level of debt – a mortgage, a car payment, etc., but big-time debt could include past-due tax liabilities and a mound of credit card debt.

However, even if you feel like you are “drowning,” there are plenty of options and steps you can take to manage it better and get out of debt before you even consider bankruptcy.

First, let’s discuss past due tax debt. If you owe the Internal Revenue Service (or any state or local authority), this is something you should take care of right away. The IRS is more than willing to work with you on allowing for monthly payment arrangements (more on that in a future blog post).

The worst thing you can do (or not do) when it comes to ignoring your tax debt is to ignore it. Believe me, it’s not going away. Ignoring “past due” statements only increases your debt with additional interest and fees, but the correspondence will become more severe until you eventually face possible garnishment.

Do not ignore your tax debt.

When it comes to credit cards, the best thing you can do in order to handle this amount of debt is to stop using your credit cards. Just stop.

If you have multiple card cards, read your statements and figure out which card is charging you the most amount of interest and then focus on paying off the balance.

Another theory to handling credit card debt is to pay off the smallest debt first and move on to the next lowest card, etc. Some choose to pay each card each month and this is good, but you’ll need to may an effort in making sure your payment is larger than just the minimum due.

If you only pay the minimum amount due, it will take you a long time to pay off that credit card because of the interest charged.

Again, take a look at the interest each credit card is charging you and make proper payments accordingly.

In our next blog post, we’ll take a more in-depth look at how you can pay off your tax debt.