Whether you are thinking of purchasing your first home or looking to upgrade the amount of debt you are carrying is something lenders examine closely. Whether you have your debt under control or need to get it under control here is some information that should be useful.
1. Figure out what you owe and what it is costing you. Write down outstanding balances and
interest rates on all credit cards and loans.
2. Good debt and bad debt
A student loan is an example of good debt. A student loan is an investment in your future which will outlast the debt. You can take years to pay off a student loan and depending on your income you may be able to deduct the interest. http://www.irs.gov/publications/p970/ch05.html
Bad debt has high interest rates and only loose value over time. Credit cards and auto loans are examples of bad debt. The average interest rate on a credit card is 15% and average interest rate on auto loans is between 7 and 8%.
3. Control your lenders
Stop using credit cards, just keep one for emergencies. Call your creditors and ask them for a better rate. You can also transfer credit card balances to a lower rate card or explore introductory rate offers. If you are considering introductory rate offers beware of the balance transfer fee which is usually 3% of the balance transferred. Introductory rates usually have strict limitions. Know the teaser rate, when it expires and what the new rate will be. Also, know what will result in the loss of the teaser rate such as a late payment. Something else to consider, don't close the account with your old credit card company, an unused credit card can actually help raise your credit score.
4. Student Loan Costs
If you are in school the average rate is 6.54% or if you've started repaying the rate is 7.14%. Shop for a better rate. http://simpletution.com
5. Spend Wiser
Develop a budget to see what your spending and whats left at the end of each month. Look for unnecessary spending for example, forgo happy hour, pack a lunch instead of eating out, bring your own coffee instead of stopping at the local coffee shop. Apply the extra money to your credit card payments.
Source: http://money.aol.com/
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