Getting Your Financial House in Order
I meet with a lot of homebuyers, many of them quite young, who want to buy a home. Problem is, they are not ready to buy because of their credit card debt. Things happen in life. Paying for college, health issues, loss of a job – all these things are reasons why some of us have credit card debt. What should you do if you want to buy a house but need to take care of some old credit card debt. Here is advice on getting your financial house in order so you can buy a house.
Clark Howard, a consumer reporter on Headline News and on WSB Radio (nationaly syndicated or available live streaming on the INTERNET) has a plan for you.
If you have several cards, your first goal is to pay off the card with the highest interest rate. This process is called laddering.
Pay more money toward that credit card and slightly less toward the other cards, until the card with highest-interest debt has a zero balance. Then you move onto the next card, and so on and so on. Resist the temptation to close the account when it’s at a zero balance. Doing so will only hurt your credit score.
One proven way to pay more toward the card with the highest interest rate — and to get rid of it faster — is to make a separate payment every 14 days to the credit card company. Mark your calendar every 14 days and write that check or send your online payment that day. Making a payment every 14 days equals one extra month’s payment you’ve made at the end of the year. Work these payments around your statement cycle to avoid paying late fees.
For help during the process, contact the National Foundation for Credit Counsling at NFCC.org or call 800-388-2227. You may also want to check out the book Invest in Yourself: Six Secrets to a Rich Life by Marc Eisenson.
Clark Howard has done more t help people wih their finances than anyone else I know. I also highly recommend Dave Ramsey’s Financial Peace workshop. Go to his website and find where one is being offered near you. My church is doing one right now but it is full and classes have already begun. You will learn how to budget and plan for your future.