Saturday, 2 August 2014

4 Important Things To Do Once You Repay Your Credit Card Debt

Posted at  22:46  |  in  Debt

Are you ready to take charge of your own life? Are you ready enough to stop the soaring cycle of over-spending and mountain of debt from rising further? If answered yes, then you should know that paying off your debt doesn’t end all your tasks. When you fall in debt, your outstanding balance keeps on increasing in accordance with your income and your creditors keep calling you for money. When you stop making payments, your accounts get turned over to debt collection agencies. But when you start taking steps to repay your debt and you emerge successful, this doesn’t mark the end of your journey. You have to continue with some good habits so that you don’t fall in debt further in life. So, what are those habits? Check them out.

  1. Continue using your cards responsibly: As long as you believe in your ability to tackle your credit cards, you should keep on using them, but responsibly. Keep your balance way below your credit limit and make sure you pay off your balance every month instead of carrying them onto the next month. As your creditors report the payments to the bureaus, this will keep enhancing your credit score. Once your credit score improves, you will find it easier to take out new lines of credit at a favourable rate. 
  2. Keep making payments on secured loans: No matter what your income is, don’t delay making payments on your secured loans like your auto loans or mortgage loans. As the secured loans have your valued property as collateral, the lenders might run after them if you become delinquent on the payments. So, even after you repay your high interest credit card debt, keep making timely payments on your home loans and auto loans.
  3. Continue saving money: Once you become successful in repaying your credit card debt, doesn’t mean that you can put a halt towards your saving efforts. No one knows when one will be faced with financial turmoil. Hence, you should remain on the safe-side by saving money every month. Although financial experts ask people to save at least 10-12% of what they earn, you may even automate your savings account to avoid forgetting.
  4. Keep aside money for retirement: Do you want to be counted among the retirees who are drowning in debt? If answered no, make sure you continue with saving money for your retired life. If your employer offers you a 401(k) account, make sure you contribute a portion of your income into that account. You can also save money in an IRA as they are the perfect instruments for saving your pre-tax dollars. Don’t raid these accounts whenever you need money as you will be subject to unnecessary penalty fees.
Hence, when you’re done with repaying your credit card debt, don’t just sit back and adopt a lackadaisical attitude towards your finances. Always remain pro-active so that you can get hold of the mistakes and always stay on top of your finances. Hire a financial advisor if you think you need professional help.

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Jimmy Simond is founder of wallstreetsfinancenews.com he share his immense knowledge of finance in this blog. You can follow him on Google+.

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