How to Get Out of Debt

Speaker: Now, for your money it might hard for us to admit that we have credit card dept, but it's definitely a topic that we worry about, especially now, when we are feeling the impacts of the economy. Financial expert Maribel Aber recently start by better to talk to Audra about, how we can get into the drivers seat and take control of credit card dept. Audra Lowe: Maribel we have all felt the pressures of credit card dept. It could be college expenses and unexpected economic hardship, is something that a lot of people can relate to. But the point today is really just solving it. How, can we get out at this point, right? Maribel Aber: You are absolutely right, we have all been there. I have been there, you have been there, whether or not, we had to pay for our daughters credit card, but braces or you just want a new furniture for your new apartment, I mean we have all been there. But we just need to recognize that it's okay, that we have this problem and get out of it. All the times we kind of hide, right? And I don't thing people do know, the dirty little secret is that according to myFICO.com, the average consumer actually carries thirteen credit card applications. Audra Lowe: Thirteen. Maribel Aber: Thirteen. Audra Lowe: Okay. So while we are a lot more like that we really do think. Maribel Aber: That's right. Audra Lowe: So, you have got some important steps for us to rid ourselves of credit card dept which is a big thing. Right now, people are trying to get rid of the credit card, especially with all the changes that are going on. And one of the first things that you say, is figure out really what you owe, gather all your credit cards together. You have to really face it. Right? Maribel Aber: You have to face the music. That's the number one thing. Gather up all your credit cards, find out what your balance and find out what the annual percentage rate, each card is charging you, that's they call the APR. Once you find that out, you want to call that card and you want to try to negotiate that APR down, because sometimes I say, but sometimes I say, yes. And the important part is you want to make sure that you are spending more of your money towards paying down the dept, not the higher annual percentage interest rate. Audra Lowe: Because that will keep you going and going and going. Maribel Aber: Exactly. Audra Lowe: That's what they are begging onto you. The second step that you have hear is pay the minimum for all your credit cards except the one, that has the highest APR. Maribel Aber: That's right, and the reason for that is because you are paying the most for that card. You want to pay the one with the highest APR first. The other thing, I would also like to say, is a lot of times we tend to carry a lot of balance on our credit cards. We have got to be very careful, because if you are 30% carrying on that card or more, that's going to effect your APR. So, you work so hard to get it down all of a sudden, you think well, I have Max's card, you might to shoot that one to the top, right next to the highest APR, because you are just going to be stuff. Audra Lowe: And start tackling that one, right away. The third step, you say is really just eliminate them altogether, get rid of them. Maribel Aber: Yes, I like that one. That's the hardest one for a lot of people stop using your credit cards, I love to use this example, especially for young women. You are doing great, you are paying down your credit card and all of a sudden you the great Gucci bag it's on sale, you know, you have been there and you are like oh! It's $600 it's just totally on sale, I should do. Well, think about you charging it on your high APR interest card. You are paying minimum payments and get this, you are probably going to spend the next seven years paying for that bag a $1000 instead of $600. Audra Lowe: So let me ask you this and I know, this is one of your next steps too. Now, you know, what you are dealing with. How do you get the money then, to pay the extra. Maribel Aber: Absolutely, it's the cash flow. Where am I going to get that money. So two things, they have these low interest credit cards, where they offer a balance transfer. So what is that? You can take your balance from your high annual percentage rate card, and bring it down to the lower rate card. So you can actually again, follow the same philosophy. Use more of your money to paying the dept instead of the annual percentage rate that's so high. So but one thing to remember is you don't want to tag on more charges, because new charges on the lower rate card will apply a higher annual interest rate. Audra Lowe: And then, your last-up is a great one too. It seems so simple, so basic but you got to pay on time. Maribel Aber: You have to time. You'll mess everything up, if you don't pay on time. And the easiest way I say, is go ahead and pay online. Set up your things and you know what you can do? Say, I'll call the fifteenth the day that I have automatic payments. But the first of the month, is when I review the bills, just to make sure, everything is on point. Audra Lowe: You just have to have a plan and stick too. Thank you so much Maribel Aber, good to see you again. Maribel Aber: Good to see you too. 1