Start with the smallest balance and pay as much as you can towards it while making minimum payments on everything else. Start with the card with the highest interest rate. Then do the same as above.
While you’re doing that…
Cut up your retail credit cards. Don’t use them again unless you get a kick out of paying 20% more for everything you buy.
I do this on Sundays. I transfer money from my checking to credit card each week.
IF YOU’RE ALREADY LATE ON PAYMENTS:
Don’t use settlement companies. Ever.
Don’t use consolidation companies. Ever.
Don’t use Payday loans. Ever.
Don’t use title loans. Ever.
If you have a savings account with a credit card you’re late on, the bank can (and will) take whatever you have saved.
If by some miracle you qualify for a consolidation loan from your bank, then make damn sure you close the other lines of credit…otherwise you’ll “find yourself” with double the debt you had before.
You’re basically paying for awful service while they use your money to make money.
Use a credit union.
They are owned by the members. Credit unions have competitive rates. They are usually easier to deal with. Credit unions are now everywhere.
Pick a good one, treat them right, pay on time and you’ll never hurt for money again.
Credit is a scam.
Credit is used to enslave you. It’s a trick to keep you in the debt game.
Don’t play by the rigged rules.
Take out too much, you’re penalized. Don’t use enough, you’re penalized. Something bad happens to you, you’re penalized.
Know what’s crazy?
Am I a bad consumer? No.
In all three cases, my credit was being used as leverage to extract cash creditors had no right to.
They wanted me to liquidate my savings and retirement just to end up broke and still have bad credit.
What did I do? Nothing. I kept my money. Then I bought a sports car.
Late payment: An old apartment complex moved a cleaning fee into collections because I was “late” on paying it. My bad…I left them a sparkling clean apartment.
What did I do? Got a better apartment. Told the new property if they wanted a good resident then I’m ready to sign. If not, I have the money and means to go somewhere else.
No payment: A medical bill was moved to collections because the insurance company and doctor’s office messed up the billing. But the collector wanted me to do the work of figuring out what someone else screwed up. Not. My. Job.
What did I do? Got a physical. Then I told them to figure it out and never call me again.
Bad credit? My credit union didn’t care. They got paid, so what?
Keep in mind. Creditors use their leverage to drain the middle class of their savings.
Some states have allowed creditors to place a lien on your home or garnish your wages to collect on unsecured debt. If you are unfortunate enough to live in one of these states, get rid of the debt, get rid of your bank, build up your emergency fund and move.
For more info on your state, you can look here (I have no affiliation with the site and can’t vouch for the accuracy of the info).
I kept doing what I always did. I paid my credit union on time and was a good member.
The funny thing about debt is…
When I paid off my debt and started an easy budget, it felt like I had more money and more freedom than when I had no budget.
So when you choose to live within your means, pay off your debt and build an emergency fund, you’ll never have to look at your credit again.