Credit Card Purgatory - A 7 Step Comprehensive Plan to Get and Stay out of Credit Card Hell

Does this Sound like You? There are 100 shopping Days left until Christmastide and your Credit Card Balance is Higher now then it was in the beginning of the year. You may have got thought of using your home and getting a debt consolidation loan, A Debt Consolidation Loan without a solid Long Term financial program is a Recipe for Disaster. A One manner ticket to Credit Card Purgatory

The Debt Consolidation Loan

Most credit cards necessitate a Minimum Monthly payment of 3% to 5% of the Outstanding Balance. On a 10,000 Balance that is $300 to $500 Monthly. On a $20,000 Balance that is $600 - $1,000 Monthly. The Interest on your Credit card payments would not be Tax Deductible,

If you Refinance your House and Consolidate your Bills even at an interest rate of 6% you would only pay $60 a Calendar Calendar Calendar Month for $10,000 or $120 a Month for $20,000 (For many homeowners this would be tax deductible)Your Monthly Savings will be between $240 and $880 a Month. The Key to a Good Financial program is to utilize this extra $240 to $880 a Calendar Month to construct a Failsafe, your Economic Life Preserver. (If you don't ain a home and still have got got fairly nice credit you might be able to get a signature loan from your bank Oregon credit union.)

If you currently have a mortgage paymet based on an interest rate of 3% or Higher you may desire to look at refinancing your House using a Loan where the payments are fixed for 5 Old Age based on a 1.95% interest rate. On a 200,000 Loan this tin often intend an further $400 a calendar month or more than in savings.

Let's Assume you salvage $700 a Calendar Month with a Combination of the above 2 Methods.

1 - Emergency Savings

You would desire to maintain at least 2 Months worth of Bills (3 Months would be Better) in a Savings or Money Market Account. Bills would include Rent or Mortgage, Utilities, Medicine, Food and Insurance Premiums. You need to do this account a Priority. Topographic Point at least $300 a Calendar Month into this account until you have got reached your Goal of 2 Months Worth of Bills or $5,000 whichever is Higher. After you Range Your Goal Continue to put $50 - $100 in this Account until you have got reached Double your Goal. (4 Months worth of Bills or $10,000 whichever is higher) Once you have got got reached Double your Goal you no longer need to put money in this account.

Some People will just Borrow an Extra $5,000 and topographic point it directly in there Emergency Account.

2 - The Debit Card

After you have established your Emergency Savings you will desire to set up a Debit Card Account. Open a Bank account and get a Debit Card. Deposit $100 or More Monthly into this account until your balance attains $1500. Now If you have got an Emergency car Repair, Home Repair, Dr Bill or any other type of unexpected disbursal usage your Debit card rather then a Credit card. Your Goal should be to keep this account at $1,500 to $3,000

3 - The Credit Card

Most people don't need to rake up all there credit cards they just need to manage them better. Cancel all but 1 or 2 of your credit card accounts. Credit Cards are an Important Part of Life, An unexpected car repair or Dr. Bill can be handled very easily with a credit card (If you don't have got adequate money in your debit entry card account). With the exclusion of an Emergency never charge more in any calendar month then you can Pay in full when the measure comes. Wage off all new Charges in full within a hebdomad of getting the Bill.

4 - Insurance Needs

Insurance needs would be things like Life insurance, Health Insurance and Long Term Care Insurance. Contact an Insurance professional to discourse your needs. If you don't have got got any Life or wellness insurance expression into low cost options like term Life and Discount wellness care until you have extra finances to travel for the higher cost options (After your emergency account is established) Life insurance can often be combined with retirement planning see measure 5.

5 - Retirement Savings

Use at least one-half your nest egg from your measure solace loan to fund an individual retirement account for you and your Spouse. Talk with your Accountant to see your individual retirement account Support Limits. In 2005 people who measure up could put up to $4,000 a Year into an individual retirement account or Philip Roth IRA. People over 50 who measure up can put up to $4,500 in an individual retirement account or Philip Roth IRA. For more than information and form out regulations you can see the Internal Revenue Service publication here http://www.irs.gov/publications/p590/. If you don't measure up for an individual retirement account or you already have got got it funded expression into other options like Universal Life and annuities.

6 - Some Girls (or Guys) Just Need to Have Fun

Everyone Needs and Enjoys to have a good time. Don't get so hung up on getting that emergency monetary fund or edifice a retirement nest egg that you don't have got fun. Budget something merriment a few modern times monthly. Movies, Bowling, The Menagerie a trip to the H2O park, a Nice dinner whatever it is. Even if it is only $10 or $20 a Calendar Month in the beginning when things are tight. You can always add $50 a calendar month for a holiday monetary fund later.

7 - The Budget Review

Once or twice a twelvemonth reappraisal your budget. See how your Emergency and Retirement finances are doing. Look over your credit cards and do certain you are paying those measures in full.

If your state of affairs changes for better or worse. You would desire to make a review. Things that may trigger a review. A Wage addition or Decrease. An Added Expense like a Car Payment. A Major change to an expense, Much higher Gas Bill or Mortgage. Car Payment is Paid in Full. A kid starting college or private school.

By combining a Bill Consolidation loan with the above 7 Measure Financial program you are taking the required actions to assist see you won't happen yourself in credit card Perdition Again.