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Credit Card Debt
By Alexander Daskaloff
HarperCollins Publishers, Inc.Copyright © 2006 Alexander Daskaloff
All right reserved.
Step 1 -- Organizing
The Never-Ending Statements
You've probably already guessed that organization is the first major step in overcoming credit card debt. If you are well organized already, starting the process should not be hard. For those disorderly individuals, however, it is now time to follow a new path. Now, let's begin!
First, collect all your monthly statements from each of your credit cards, including past statements. You will want to separate all statements according to credit card, then arrange them by order of date. Put papers such as transfer checks, cash advance checks, and letters in separate piles.
It is recommended that you use a filing cabinet or a series of file folders. Each credit card should have its own file or section. Then make a separate file for all transfer checks and cash advance checks. Create a miscellaneous file for stray papers that do not belong anywhere specifically. Label everything. Once all that is in order, you'll need to be able to put these documents in a place where you'll have easy access to them.
You have now completed your first step in organization!
The next step will be to take all those important figures, such as current balance, interest rate, and credit limit, and place them onto one of several charts. If you've ever looked closely at some statements, they might seem tobelong in another world. Be sure to take a look at the sample statement that has been provided on page 190, so that your statements become familiar and intelligible to you as we begin the process of organizing, analyzing, and reducing your debt.
Four charts are provided for your use; in them you will place important information about your credit cards. These charts are very important in managing your credit card debt. Make sure that all the information you are asked to provide is accurate and up-to-date.
- Chart #1 -- "The Layout" -- offers vital information in keeping track of your credit cards, especially when planning balance transfers. It will he the most frequently used chart.
- Chart #2 -- "The Details " -- provides specific information that is required when speaking to a customer service representative, traveling, or making payments.
- Chart #3 -- "The Transfer" -- helps keep track of balances that are transferred between accounts.
- Chart #4 -- "The Monthly Checkup" -- will help you organize and review your total balances and finance charges on a month-by-month basis.
No matter how many credit cards you have or how many balance transfers you need to make, whether your economic situation fits that of Tom, or the Joneses, the following charts are essential in battling your credit card debt.
All individuals will greatly benefit from completing "The Layout" chart. It is essential to understanding and applying the recommendations of the book.
Take a look at "The Layout" chart at the end of this section; in it you will place vital, accurate, and up-to-date information. The information called for in the chart is essential to proceeding any further in the book, because it is the chart most frequently referred to throughout. Therefore, Tom needs to put down that term paper, Jennifer should resist from shopping tonight, the Joneses must put the children to bed, and Bob truly needs to postpone that trip to Florida.
It will be helpful to study the samples provided at the end of each section. Using Bob as an example, these charts reflect his credit card finances after he implemented the methods and recommendations found throughout the book. Blank charts have been provided at the end of each section for readers. So grab those charts, get comfortable, and let's get to work! (It is suggested that you make photocopies of all blank charts before writing down any data. And, when it is time to write, always use a pencil!)
- In the first column, "Credit Card," list your credit cards by name of issuer. List them in alphabetical order -- in our example, we will use Bank One, Bank Two, Bank Three, and so on-and be consistent; use the same order in the other charts.
- In the second column, "Balance," list your current outstanding balance; in other words, what you now owe to that particular credit card. This figure will change frequently, which is why it is recommended you use a pencil. Do not round off numbers; it is important to be exact. For example, if you owe $2,725.30, write $2,725.30.
- In the third column, "Interest," write down whatever interest you are paying on that particular balance. The interest rate is otherwise known as the APR (annual percentage rate). Most likely there are different interest rates on your statement. These rates might apply to purchases, cash advances, and balance transfers. Once again, do not round off the numbers: If the rate is 8.9%, write down that figure. Sometimes more than one interest rate applies to your entire balance; for example, you might have transferred a balance at a special low interest rate to a credit card that already had a balance, but at a much higher interest rate. In such circumstances, write both rates down and specify what rate applies to which balance. You will then need to figure your average interest for the balances combined, a process later explained in "What's Your Average?" on page 48.
- The fourth column, "Expires," relates to the expiration date of the interest rate in the "Interest" column. You need to know when that rate no longer applies to your balance. If your balance is linked with a special shortterm low interest rate, chances are you will not be able to find the expiration date on your statement. Refer to the original letter that accompanied the offer or contact a customer service representative. This column is very important, for it will help you remember when you'll need to transfer your balance(s) or call customer service to make arrangements to extend the offer, which is explained throughout "Step 3 -- Reducing, " starting on page 53.
Excerpted from Credit Card Debt by Alexander Daskaloff Copyright © 2006 by Alexander Daskaloff. Excerpted by permission.
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