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Editor’s note: This is a guest post by Noreen Ruth
We’re heading into the dog days of summer and before you know it the crispness of fall will be leading us into the season of giving. Finding the perfect gift for those you love is stressful enough without the added worry of more debt. Excuses are easy to come by, but now is the time to take action to insure that your holiday shopping doesn’t push you into uncontrollable debt.
These five steps to improve your financial situation before the shopping season begins:
1. Check Your Score
The importance of checking your credit score can never be overstated. Request yours today by visiting AnnualCreditReport.com. A score of 700 or above is considered a good score and will be viewed positively by lenders and banks. For this reason, keeping your score high should be your top consideration making all your payments on time; not overextending the amount of credit you carry, reviewing your report periodically for errors and pursuing corrections when discrepancies are found.
2. Examine Your FinancesMany people deliberately avoid doing the calculations to assess their debt for fear of what they’ll find. But you can’t effectively put a financial plan into place without knowing the starting point and acknowledging the potential for damage that your debt may cause. List all of your debt and the balances owed, taking into account the interest rates you pay every month and compare it against how much income you have coming in each month. This will give you an idea about your current situation.
3. Prioritize Your Repayments
If you’re struggling to pay the minimum each month on each account, you’re in trouble. Examine which accounts are costing the most and put them at the top of your list for payoff or consolidation with a lower rate account. Focus on paying more than the minimum on high interest cards until they’ve been paid off, even if you have to resort to paying the minimum for your other accounts.
4. Lower Your Interest Rates
You may not think you qualify for a new, low interest credit card, but it doesn’t hurt to apply. By transferring your higher rate balances to a zero or low rate card, you can save hundreds of dollars over the course of year. Just make sure you understand the balance transfer fee that will be applied before making the move. Another option to lower interest on your higher rate cards is by calling customer service and asking. Be prepared to explain your situation, when you appeal for help. If they won’t lower the interest, as to have the annual fee waited.
5. Create a Plan to Lower Your Debt
The only way to change old habits is by forming new. So examine the way you live and look for ways to cut and write a new plan of action to lower your expenses and in turn your overall debt. Now that you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you’ll also know how much you can afford to put toward paying down your credit card debt each month. Keep a calendar showing the due dates of all your bills; use online payment systems and automatic payments, whenever possible.Of course, if you have discretionary income now, you can begin to gradually buy gifts over the course of the next few months. By starting now, you can lower your debt to avoid some of the stress of Christmas giving.About the Author: Noreen Ruth writes for several popular finance websites. She is interested in educating consumers about using credit responsibly and about legislative action that will affect their ability to borrow the money they need. She has contributed hundreds of articles to various online sites that provide content to educate consumers on credit cards, debt consolidation, loans and other finance related topics.