Consolidate your ridiculously-high-interest debt
In these hard times when money is hard to come by, the last thing you want to do is pay the banks 24% (or even 8%) interest on any sort of debt when they’re only paying you 0.0000005% interest on your savings accounts!
(This is Tip #4 in the Surviving The Recession Financially series)
Credit line debt and credit card expenditure are not meant to be long term loans, and if you’re using them as such (by paying less than the full amount owed each month), you are doing yourself a huge disservice.
Prevent yourself from getting into a debt problem
Are you in too much debt? Check the amount you’re using to pay off debt against your monthly income. Your debt repayments shouldn’t be more than a third, or 33%, of your income. If it is, you’re over-leveraged, or in layman’s terms, you’re in more debt than you can handle.
So before you take another installment, or another loan, check that you have enough income to pay for these additional debts!
Fix your debt problem
Ok so it’s too late - you’re already in debt. High-interest debt.
Try to consolidate your debt by taking advantage of banks’ 6-month, 0% interest balance transfer promotions (you usually only have to pay a 1-3% fixed charge) to consolidate your debt and pay it off in a systematic manner over 6 months. You will save a significant amount of money as compared to just paying off a portion every month as the interest rate on credit card and credit line dues are simply ridiculously high.
If you have problems doing so, but are determined to reduce and eventually eliminate your debt, you may talk to Credit Counselling Singapore and they may be able to assist you to negotiate with these banks and maybe even restructure the repayment of these debts on your behalf. If you’re serious about reducing debt, it’s definitely worth a try!
Aim to reduce your credit card debt in these trying times - that new blouse ain’t worth the 2% interest per month!
2 Comments, Comment or Ping
Aaron Wakling
Just wanted to say HI. I found your blog a few days ago on Technorati and have been reading it over the past few days.
Jan 12th, 2009
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