Money Savvy Living Autumn 2013 | Page 7

interest is accruing daily.

Pay more than the minimum payment amount. If you are just making the minimum payment, many times, you are only paying the interest that accrued that month. Anything extra that you can pay goes toward the principle balance and will reduce the compounding effects of the interest.

Pay down higher interest rate cards first. Getting rid of the higher interest rate cards first will free up more of you money each month to pay down other debts. Much of your payment each month actually goes toward the interest that has accrued, so getting rid of these types of high-interest debts will allow you to put your money to

work in other capactiies, such as paying down your mortgage or auto loans, to get debt free.

Limit credit card use. If you truly want to get out of under the pile of debt that is on your credit cards currently, you need to limit credit card use, or stop using them altogether. It is much easier to overspend each month if you are using credit cards because you don’t feel the pinch of how much was spent until the credit card statement shows up and it’s timeto pay your bill.

Use cash as much as possible. Paying for puchases in cash will drastically reduce the amount of money that you spend each month. Actually watching the money leave your wallet and dwindle until payday again has the effect of making you think about each purchase and whether it is necessary or not. It is impossible to overspend when you only have so much money set aside for groceries, gas, or other household items.

Make a budget. Write down your sources of monthly income and expenses. Any money that you have left over after paying all expenses is your disposable income.

"The average American household debt is $7100 with an average credit card interest rate around 12%”