Sense & Centsibility Blog
How do I pay off my credit card debt faster?
Meet "Angie". Angie is the typical married, working mother of 1 wild toddler. Angie has a mortgage, 2 car payments, and credit card debt. She has been struggling with credit cards for years because her balances would barely decrease and a friend recommended calling LSS. Angie met with a certified credit counselor who reviewed her budget and spending plan and provided her with an easy-to-follow action plan with realistic steps to achieve her financial goals. Her counselor also recommended a Debt Management Plan (DMP) with LSS to help Angie repay her debt. After researching DMPs, she enrolled in a DMP, which is a personalized debt repayment plan that allowed her to make one manageable monthly payment. LSS was then sent out her money to each of her creditors individually.
Snapshot of Angie's Finances*
- Angie's total credit card debt balance: $22,150
- Her average interest rate prior to the DMP: 17.9%
- Average interest rate on a DMP: 8.3%
- Estimated monthly payment with an LSS DMP: $484
36 Months LaterAngie successfully completed her DMP and was able to shift her focus on saving and building her retirement. She began depositing $300 a month (automatic withdrawal) to her emergency savings account and $200 to a 401k. Now she is getting prepared for retirement and with emergency savings building up, she won't have to rely on credit cards if an unexpected expense pops up, as it always does at some point. Saving for a rainy day is the best way to avoid accruing debt.
Here are 6 Things to Know About a Debt Management Plan with LSS
Combines credit card debt and other unsecured debts into one paymentHow many creditors do you have? If you are like the average person, you have at least a few. And some are on auto-pay, some you pay by web, and of course every single one has a different due date. How about one payment? One due date? And if you set up ACH auto-pay you won't even ever need a stamp or to log in to multiple places to make your payment.
Typically interest rates will be loweredI remember when I was younger I would take out a credit card when I went shopping to get 10% off my purchase and the interest rate could have been 30% and I wouldn't have thought twice! When you start your DMP, a specialist will look at your interest rates and get you the lowest rates possible based on your creditors.*
Your own personal debt fighting team here to back you upYes, I know this one sounds funny. But just think about it. Debt is so scary and the thought of making a 'wrong' decision can often prevent us from doing anything. We have financial counselors and debt specialists that will be here when you have questions. They will continue to be by your side throughout this process so you can conquer your debt for good.
A confident planSounds so simple, right? Every single time I have felt overwhelmed by my finances my stress would go down once I had a plan. When you start a DMP, we (together...you and us) will look at your credit report and evaluate the best payment for you to get your debt paid off in the quickest and safest way possible. What if my plan changes, you ask? We will work with you and your creditors to make it work.
Monthly statementsWho doesn't love watching their balances go down? Honestly, is there anything better? You will get a monthly statement that shows the balance of each debt on the DMP. I once heard from someone on a DMP that the only bill she ever loved to pay was her DMP payment to LSS. Watching the balances go down brought happy tears to her eyes!
A debt-free futureBefore you start your DMP, your counselor will tell you the magic end date when your credit card debt will be paid off. This is typically around 3 years.* Yes, you read that right. 3 years! Can you imagine when you started a diet if someone said you will be this weight on this day? Yes, please!