The key to good financial and debt management is organisation. I expect like most, you know how much income you’re going to receive within the month and know how much is going out for your utility bills and rent etc, but do you know how much is going out for your loans and credit cards? More to the point, do you know how much of that money that does go out goes towards the interest on the amounts owed and how much goes towards the debt itself? No? You’re not alone, most people don’t. You see when it comes to debt, particularly credit card debt, people know two figures, the amount they owe and the amount that went out of their bank last month. They don’t know where the money is going and what the money is doing. This is an issue. If you’re making the minimum payment on your credit card, then you’re more than likely only paying back the interest on the amount you owe / have borrowed. So in effect, you could be paying that same amount of the next 10 or 20 years - and not get any nearer to clearing the debt.
What you need to do is firstly, work out what you can afford. If you have £500 spare each month and your minimum payment is £150 - don’t just pay the minimum. Pay more. All credit card companies will let you pay as much as you like, when you like, so long as it’s over the minimum. In short, pay whatever you can afford and get out of debt as quickly as possible. There is no point having that extra £350 saved in your bank account each month and earning £1 interest on it when the same amount on your credit card is costing you £50. Save when you don’t have debts, not before.