The fastest and best way to pay off big credit card debt

credit-card-cut-upWhat’s the best way to pay down a large credit card balance as quickly as possible? All while paying the least amount of interest and not hurting your credit? Glad you asked.

First, understand that the sooner you pay down the principal, the sooner you erase debt. For example, if you owe $10,000 on a credit card and pay $200 a month, $150 of your payment goes toward paying interest. Only $50 goes toward paying down the $10,000 principal (based on an annual APR of 18%).

At this rate, it would take 94 months to pay off your debt, while costing you a whopping $8,622 in interest! That’s an uphill battle everyone should avoid.

Luckily, credit card companies, competing with one another, actually make it easy for consumers. By simply leveraging their special introductory rate programs, you can be on your way to paying down that 10K in no time.

Find a new credit card offer with a zero percent introductory balance transfer – one of the best deals in personal finance. Many banks offer these cards, which today are the strongest promos and longest zero percent APR intro periods since before the 2008 financial crisis. So, apply for one of these cards. Once you’re approved, immediately transfer all your credit card debt to the new card.

Need help finding an offer? Here’s a list of zero percent APR credit cards (with terms).

Once you’ve transferred your balances, it’s time to capitalize on the interest-free period to really break free of debt. And it’s so simple. Just keep paying the same amount you were paying your old high-interest card, only now to the new no-interest card. Now you’re paying off principal at 100 percent.

Pay attention to the terms because once the introductory period is over (typically 12-18 months) the interest rate could actually be higher than your original card. Use this period to pay down as much of your debt as possible.

Stop getting crushed on interest. And start planning that going-away party for your debt. Move your high-interest balances to a zero percent interest card now.

How To Pay Off Student Loans (Faster)

The joy of graduating from college can be short-lived once you open your inbox and find an email alerting you that the first payment for your student loans is due. And yes, four-plus years of tuition costs can add up to some big numbers, but if you set some reasonable goals and adjust your spending, you can take on those loans and still find ways to enjoy post-grad life.

Ducks in a Row

In between job hunting or during your first-week orientation, you should figure out a plan for repayment. Gather as much information about your living costs as you can. Pull the paperwork for your loans, rent/mortgage and utilities, insurance premiums (health, car, home) and other payments (vehicle, credit cards, etc.). If you’re unsure about how much you’re spending on things like entertainment and groceries, you’ll need to compile the data for those costs, too.

Lay it all out in a spreadsheet or use an app to give you a clear idea of what you can reasonably spend, save and afford. Once you have those ducks in a row, it’s time to dive in. Give yourself a jump-start by actively finding ways to cut costs.

Start, Snip & Sacrifice

Once you know how much money you’ll have coming and going each month, you’ll be ready to trim some of your expenses. This doesn’t mean living on ramen noodles or with six untidy roommates. Instead, you can:

  • Cut the cable. Stream content through Netflix, Amazon Prime or Hulu and pick up a digital antenna for local channels. Don’t be afraid to haggle for the cost of your Internet connection, either.
  • Dig it. Want organic veggies? Skip the fancy grocery stores and plant some seeds. If you don’t have the outdoor space, search for local food CSAs in your area.
  • Hitch a ride. The daily commute can be expensive. Talk to your co-workers about a carpool or get in some free fitness by biking to and from your nine-to-five.

Once you start looking for ways to save yourself some money, you’ll likely start noticing opportunities everywhere. Further motivate yourself by making it a challenge to put an extra $25 or $50 toward each student loan payment you make. These amounts may seem small but they’ll make a big difference.

To pay off loans quickly, small sacrifices aren’t the only ones you’ll need to make. Look at jobs in smaller communities with a lower cost of living and keep your car as long as you can, even if it’s starting to look a little rusty. For some, the sacrifice isn’t objects, it’s time. A second, part-time job can help you make more than one payment a month.

Repaying your student loans may feel daunting but with some extra effort and a solid understanding of your budget, you can do it. After all, you got through finals week every semester, didn’t you?

How long did it take you to pay off your student loans? Have some tips to share? Tell us in the comment section.

What’s the real cost of tuition?

A college degree isn’t getting any cheaper. And neither is the price of food, medical expenses or just about anything else. The price of tuition is actually increasing four times faster than the consumer price index. Yikes.

If you or your kid are thinking about what’s next in life and feel college might be an option, it’s more important than ever to think critically about what career you want and the smartest way to get it.

The debt being created by tuition prices is a nationwide problem dwarfing that of credit card debt. More than 70 percent of students are graduating with an average of $33,000 in student loans, according to Edvisors.

So what’s the real cost of tuition? Depends who you ask.

A college degree has been valued somewhere between $185,000 (Organisation for Economic Co-operation and Development) to $1,000,000 (U.S. Census Bureau) over a lifetime. However, those figures were calculated based on the economic conditions of past generations. College graduates today probably won’t enjoy the same return on investment.

Some sources claim a degree may even lose the graduate money over the course of a lifetime. As a result of a student loan debt, many degree holders will spend years attempting to pay off debt rather than save and build equity. Be careful about the debt you take on.

Think hard about the career you want – a degree may not be required. Debt can be kept low by attending community college first and avoiding private schools. Talk with parents, friends or trusted adults about options to keep debt low. Whether that means a part-time job or working summers, avoiding student loans wherever you can is a safe way to avoid long-term debt.

College enrollment has decreased for the last three years straight. And while this may eventually mean lower tuition, being smart about the debt you take on to get that degree may save a lot down the road.

21 Things You Should Know About Money In Your 20s

In your 20s, anything is possible. At least, that’s what it feels like, right? For many, this decade means everything from graduating college and taking adventures to starting careers and families. With all these new beginnings, it’s equally important to start getting into some smart financial habits, too. Recently, we asked Missouri Credit Union employees what advice they wish they would have taken when they were in their 20s. Here’s what they had to say:

  1. Always enroll in the employers’ 401k plan, especially if they’re contributing or matching your deposits. –Jenn Clark, Personal Financial Officer
  1. Start saving for retirement with an IRA. –Tessa Wacker, Branch Manager
  1. You may think putting away $10 here and there will never add up but it does! Create special savings accounts for specific goals, like vacations or buying a home. –Sara Sauro, Branch Manager
  1. Open a college savings account on the day your kids are born. –Ross Smith, SVP/Operations
  1. I wish I had known how important credit is – I had no idea how much my credit score would affect my life. –Jessie Claycamp, Vault Teller
  1. Spend less and save more. –Cindy Campbell, AVP Retail Operations
  1. Follow the Rule of 72. Divide the interest rate into 72 and whatever the answer is will be how long it will take for your principal (starting sum) to double. –Jim Schepers, VP Human Resources
  1. Pay attention to your credit score. It could play a part in approving your apartment application and the amount of the deposit you may have to make. –Jenny Redmond, Teller Supervisor
  1. Never borrow or cosign for money unless you have every intention and ability to pay it back. Also, make sure you’re depositing funds into a savings account for the unexpected. If times get tough, stay in contact with your creditors. –Matt Langley, Collections Officer
  1. Start funding your 401K as soon as possible – you can take it with you no matter where you go. –Amanda Love, Branch Manager
  1. If your paycheck doesn’t cover your spending that means you don’t have the money. A credit card isn’t money; it’s debt. –Michael Taylor, Data Security Specialist
  1. Skip the daily coffee or soda and put that money into a savings account. Every time you accumulate $500, open a 60-month CD. –Norine Bailey, Personal Financial Officer
  1. It’s easier to build on zero, little or good credit than it is to repair bad credit. And bad credit will haunt you. –Jessie Kemble, Teller Supervisor
  1. I thought that I couldn’t save any money and had to live paycheck to paycheck, which isn’t the least bit true. Find a way to put away money – you’ll be grateful in the long run. –Margaret McDermott, SVP/Marketing
  1. Put more thought into planning for your retirement. The years go by quickly and your money will add up if you start early. –Debi Findley, Personal Financial Officer
  1. Make your payments on time. Those ‘little’ late fees add up and can take a big bite out of your finances. –Rachael Johnson, Collections Officer
  1. Have the money for your savings or 401k taken right out of your paycheck so you won’t see it or miss it. –Jackie Reehoff, Branch Manager
  1. Money doesn’t grow on trees. Prepare for the unexpected. –Karley Jeffrey, Real Estate Loan Representative
  1. Open only one – just ONE – major credit card and pay off balances as soon as possible. –Steph McDermott, AVP/Manager Call Center
  1. Life insurance is a necessity beyond what your job and loans offer. –Becca Varner, Personal Financial Officer
  1. Choose a career based on your passions, not on the projected salary. While money will make life a little easier, it will not necessarily make you happy. –Melinda Sirois, Call Center

MCU members, what advice do you wish you had taken when you were younger? Share your thoughts with us on Facebook and in the comment section below.

Keeping Your Credit Healthy

You eat fruits and vegetables to stay healthy and go to the gym to stay in shape. Having a credit card is no different and requires the same steady participation. Once you’ve established a line of credit, it’s your responsibility to stay actively involved. However, your diligence has its own rewards, such as lower APR rates and bonuses like cash back. Here are a few ways you can make sure your credit scores stay healthy.

Stay on It

Pay attention to what you’re spending. Too often, credit cards can feel like a free pass. Stay mindful of what and how much you purchase. When you get your statement, look it over and check for any inaccuracies to avoid being double-charged or becoming the victim of fraud (especially if you use your credit card for online shopping). Remember: you’re entitled to a free credit report once a year. Set a reminder on your calendar and stay informed.

Rethinking Repayment

A credit card isn’t for spending more than you earn. Think of your card as a 30-day loan that you need to pay back at the end of each month, and save accordingly. Of course, carrying a balance isn’t necessarily a bad thing but carrying a large balance can be. If you make a big purchase on your card, know how much you’ll need to repay each month to avoid additional interest charges.

Right on Time

One of the simplest and most effective ways you can keep your credit healthy is by making timely payments. Aside from hurting your credit score, the additional late fees can add up rapidly over the course of a year, costing you upwards of $300. For many, making more than one payment each month helps keep their credit in check, while helping sustain a steady cash flow for other expenses.

Thinking about opening a card or transferring a balance? Missouri Credit Union offers members a line of credit cards from Elan Credit Card Services. For more information, click here.