Marriage
When Love, Marriage and Money Come Together
10 Steps to Financial Freedom:
- Determine how much you owe. Gather your credit card statements, and make a list
that includes interest rates, balances, and minimum monthly payments. List the cards
by the interest rates they charge, with the highest rate first.
- Keep the card with the lowest interest rate and cut up the others. Close those accounts.
- If you don't have a card with an interest rate of less than 14%, get one.
- Resolve that you will use your cards only for essentials over the next six months.
For other purchases, use cash or an Interac card.
- Credit cards often require minimum payments of about 2.5%. If you just make minimum
payments, you will be paying your debts forever. For example, if you owe $1,000
on a card with a 19% interest rate and a $20 minimum payment, it might take over
8 years and cost over $1000 in interest by the time you pay it off.
- Calculate how much you can pay over the minimum. Try to stretch your budget. If
the minimum payments on your credit cards total $350 a month, for example, how much
could you pay if you really stretched? $750? No pain, no gain.
- Apply any additional funds towards the card with the highest interest rate. If two
cards have the same rate, apply additional funds toward the card with the largest
balance. Pay the minimum on your lowest interest rate credit cards until you've
paid off the balance on the more expensive cards.
- Consolidate your debt. Many credit card issuers offer introductory rates as low
as 5.9% for six months. If you're really serious about getting out of debt in a
hurry, transfer your largest, high-rate balances to a card with an extremely low
rate and pay them down aggressively. Watch out for transfer fees, though. In many
cases, the fees will cost you more than you can save.
- If you are unable to transfer all balances to one low interest rate card due to
your debt-to-income ratio or because you are juggling your card payments, then consider
contacting a credit counsellor at 1-800-656-3920. Debt management programs usually
can help you organize debts into one low monthly payment, reduce or eliminate interest
charges, and help restore credit ratings.
- Consider using your savings to get out of debt. Sure it sounds harsh, but if you put together a balance sheet, your debt would cancel out your savings anyway. If you have money in the bank, you're earning about 2% to carry debt at 18% or more.
