Unearthing Yourself from a Crushing Pile of Debt

Unearthing Yourself from a Crushing Pile of Debt Unearthing Yourself from a Crushing Pile of Debt Unemployment combined with bills and credit cards can add up to unwieldy debt. How can you get out?1. Take stock. Make a list of whom you owe money to, how much you owe, and what rate of interest you're paying on each of those debts. Your credit card(s) are probably giving you the most trouble; deal with those with the highest rate first. 2. Get a lower rate. Call your credit card company and ask if they can lower your rate. Then try to combine all your debt onto one card with a lower rate than what your other cards are charging you. This allows you to lower your monthly payments and therefore pay off this debt more quickly.3. Know your credit score. A high credit score can qualify you for cards with lower rates. Anything over 660 is good, and a score over 720 is great. If it's below 660, you'll need to spend a few months improving it before you can get a lower interest rate. You can improve your score by doing the following: Pay every bill on time. Even one late or missed payment c an dramatically decrease your score. Pay off the cards with balances closest to the maximum first. You'll get points deducted from your score anytime you charge more than 50 percent of the limit on any kind of credit card. Do not cancel. Closing credit card accounts can actually hurt your score. As ridiculous as it is, you're scored based on the percentage of credit you have available that you're using. If you close some accounts, your overall credit limit will decrease and you'll owe a higher percentage of the total. Check your score again in six months. That's enough time to see a 50: If your electric bill is higher than usual because of a recent heat wave, you can pay and then spend a little less during the rest of the month to compensate for the increased cost. 7. Plan way-ahead for the holiday season. If you know that, come December, youll wind up spending quite a bit on gift, buy them throughout the year and do so with only what you can pay out of pocket. In addition to avo iding a giant post-holiday credit card bill, you can save by buying things when theyre on sale and youll avoid the Thanksgiving to Christmas rush.Posted by Sophie Friedman, Vault Web Content Intern