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Managing your credit during tight times

January/February 2009 Print this Article

We have to take responsibility for our own retirement income, not to mention more immediate concerns, including a child's education and other financial goals. With so many goals, it's tempting to use credit cards to pay for other financial items. Yet, credit card debt could make meeting future financial obligations more difficult, as interest eats a big portion of your income. If you find yourself in this situation, consider these potential ways to escape the burden of credit card debt.

Renegotiate with your lenders. If your credit is good, call and ask each credit card company to lower the interest rate it charges you. Make sure you know the rates you're paying on your credit card debt. Next, establish a budget. Here you can find ways to find a few extra dollars a month to begin paying off those credit card balances. Do not use your credit cards for any other purchases.

Now that you have a budget, have found extra money and know the interest rates on all your cards, choose one of two ways to pay off the balances. First, you might consider paying off the credit card balance with the highest rate, since this is the card costing you the most money over the long term. Alternatively, you might wish to take small steps and pay off the smallest balance first. Once paid off, consider canceling your account and cutting up the card. Over time, you'll find more money than you thought was possible, and you'll have learned a valuable new financial discipline in the process.

FINRA Reference #FR2008-0908-0240/E 12/04/08

2009 LTM Publishing, Inc.

The information provided is not intended as legal or tax advice and may not be relied on for purposes of avoiding federal tax penalties. All individuals, including those involved in the estate planning process, are advised to meet with their tax and legal professionals. The individual sponsoring this newsletter will work with your tax and legal advisors to help select appropriate product solutions. We do not endorse or guarantee the content or services of any website mentioned in this newsletter. We encourage you to review the privacy policy of each website you visit. Limitations, restrictions and other rules and regulations apply to many of the financial and insurance products and concepts presented in this newsletter, and they may differ according to individual situations. The publisher does not assume liability for financial decisions based on the newsletter's contents. Great care has been taken to ensure the accuracy of the newsletter copy at press time; however, markets and tax information can change suddenly.Whole or partial reproduction of Let's Talk Money® without the written permission of the publisher is forbidden. ©LTM Publishing, Inc., 2008.

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