ANCHOR: THE AVERAGE AMERICAN HAS MORE THAN $8,000 IN CREDIT CARD DEBT ON A HALF DOZEN CREDIT CARDS.

ANCHOR: WHEN YOU’RE READY TO START PAYING DOWN THAT DEBT, YOU CAN MAKE SOME SMART MOVES THAT WILL BRING DOWN YOUR BALANCE FASTER. WGN’S MONEY SAVING EXPERT ILYCE GLINK IS HERE TO TELL US HOW.

ILYCE: GOOD MORNING. IF YOU STOP CHARGING ON YOUR CREDIT CARDS TODAY, AND TRIED TO PAY OFF YOUR DEBT BY PAYING ONLY THE MINIMUM BALANCE, IT COULD TAKE YOU 30 YEARS OR MORE TO PAY OFF YOUR CARDS COMPLETELY.

DURING THAT TIME, YOUR CREDIT CARD COMPANY IS MAKING A MOUNTAIN OF MONEY CHARGING YOU HIGH INTEREST RATES AND LOADS OF FEES, ESPECIALLY IF YOU PAY LATE. WANT TO MAKE SOME SMART MOVES TO HELP YOU PAY DOWN YOUR DEBT FASTER? TRY FOLLOWING THESE SUGGESTIONS:

SMART MOVE #1 — NO NEW DEBT

  • WAIT UNTIL YOU HAVE CASH TO BUY

  • PUT CARDS ON ICE OR CUT THEM UP

ILYCE:YOUR FIRST SMART MOVE IS TO DECIDE YOU’RE NOT GOING TO ADD NEW DEBT TO YOUR EXISTING BALANCES. INSTEAD, WAIT UNTIL YOU HAVE THE CASH IN YOUR CHECKING ACCOUNT TO BUY ANYTHING. PUT YOUR CREDIT CARDS ON ICE – LITERALLY IN THE FREEZER IN WATER, SO YOU WON’T BE TEMPTED TO USE THEM – OR CUT THEM UP IF YOU’RE TOO TEMPTED.

SMART MOVE #2 – CALCULATE PAY-OFF TIME

$8,000 IN DEBT, 13% INTEREST

MINIMUM PAYMENT: 22 YEARS

$300 EXTRA/MONTH: 18 MONTHS

BANKRATE.COM

ILYCE: YOUR NEXT SMART MOVE IS TO CALCULATE HOW LONG IT WILL TAKE YOU TO PAY OFF YOUR DEBT. IF YOU HAVE $8,000 IN DEBT AT 13 PERCENT INTEREST, IT WOULD TAKE YOU 22 YEARS TO PAY IT OFF IF YOU JUST MADE THE MINIMUM PAYMENT. BUT ADD AN EXTRA $300 PER MONTH TO THE MINIMUM, AND YOUR DEBT WIL DISAPPEAR IN 18 MONTHS. HOW CAN YOU FIGURE THIS OUT FOR YOURSELF? TRY ONE OF MY FAVORITE SITES, BANKRATE.COM.

SMART MOVE #3 – PAY DOWN DEBT WITH HIGHEST INTEREST RATE FIRST
THEN, PAY OFF NEXT HIGHEST RATE DEBT
PAY OFF MORTGAGE DEBT LAST

ILYCE: WHEN IT COMES TO PAYING OFF YOUR CREDIT CARD DEBT, THE SMARTEST MOVE YOU CAN MAKE IS TO PAY THE DEBT CARRYING THE HIGHEST RATE OF INTEREST FIRST – EVEN IF THAT DEBT IS YOUR SMALLEST. THEN, PAY OFF YOUR NEXT HIGHEST RATE DEBT, AND SO ON UNTIL ALL OF YOUR DEBT IS GONE. PAY OFF YOUR MORTGAGE OR HOME EQUITY LOANS LAST, SINCE THOSE DEBTS ARE POTENTIALLY TAX DEDUCTIBLE.

DEBT MANAGEMENT SPECIALISTS SAY THAT ONCE YOU START PAYING DOWN YOUR DEBT THE SMART WAY, YOU SHOULD START SEEING A SIGNIFICANT DECREASE IN YOUR DEBT WITHIN 6 MONTHS. FOR MY MONEY-SAVING TIP THIS WEEK, I THOUGHT I’D GIVE YOU A PLACE TO GO TO GET FREE, OR EXTREMELY LOW-COST, BUDGETING HELP.

MONEY-SAVING TIP OF THE WEEK:

FREE OR LOW COST BUDGETING HELP

NATIONAL FOUNDATION FOR CREDIT COUNSELING

WWW.NFCC.ORG (CCCS)

WWW.MONEYMANAGMENT.ORG

ILYCE: TRY THE NATIONAL FOUNDATION FOR CREDIT COUNSELING, WHICH WILL HELP YOU FIND THE CLOSEST CONSUMER CREDIT COUNSELING SERVICES (CCCS) OFFICE NEAREST YOU. OR, YOU CAN GO TO MONEYMANAGMENT.ORG, WHICH TOOK OVER SOME OF THE CCCS OFFICES IN CHICAGO SEVERAL YEARS AGO.

TUNE IN NEXT WEEK FOR ANOTHER ONE OF MY MONEY-SAVING TIPS OR FOR MORE GREAT MONEY-SAVING IDEAS, LOG ONTO WGNTV.COM AND LINK TO GLINK.

Published: Aug 19, 2003