Spring-Cleaning Your Debt with David Bach
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Did you join David Bach last month in his Facebook Live Chat?
David shared some great advice about how to become “Debt Free for Life,” how to pay off debt faster, and how to prioritize your debt.
Here are some questions fans asked David and how he answered them:
Is it wise to close credit cards to reduce the number a person has, or just not use them but keep them open?
So, years ago, Pam, the answer would have been to close those accounts so you don’t get hit with annual fees or have to worry about identity theft. Now, the way credit scores are measured, if you close down your credit cards you will reduce your credit limit that’s available. So in most cases it’s better to leave it open and not use it (or use it once a year and pay it off). I hope that helps!
Last month I completely spaced and paid my credit card bill a day late. I am not as concerned about the late fees as I am about my credit score.…How much does missing a payment damage one’s credit score?
Lucy, being late one day one time is not going to affect your credit score. However, you might have been hit with a late fee of $35, and if you were, I would call and ask the credit card nicely if they will consider crediting you back, since you are normally never late. In my experience, the credit card companies will credit you back instantly. Can’t hurt to ask, that’s for sure!
Hi David, I watch you all the time on the Today Show Money 911 segment. Here’s my question: My husband and I have never been good at saving. We are spenders. Available credit meant available spending opportunities. We’ve learned the hard way how wrong that is. We make good money, but don’t know how to hold on to any of it and now that we have 2 kids, we can’t if we wanted to! I have a large amount of debt in a charge-off/settlement payment plan, and we have probably another 17K in revolving debt (not including mortgage or cars). We are about to come into a chunk of cash between tax return and annual bonus. We have no savings. Do we put it in savings toward our “6-month safety net” fund, or do we pay down our debt?
Anonymous! Nice to hear from you so honestly. LOVE that you watch me on Today Show Money 911 segments. Thank you! Okay now let’s fix your old ways. I am officially sending you a magic bop on the head. You are no longer a “spender”—you are now a saver. Feel the magic? Seriously, stop labeling yourself a “spender.” And don’t try and use discipline. Go read “The Automatic Millionaire.” Save money and get it at the library. The whole key is to save money automatically. If you set yourself up to save money automatically you will DO IT. Go to www.finishrich.com and read the success stories. There are thousands of people on this site that used to think of themselves as spenders, and now they are savers. You can be too. Now for that tax refund…Put half toward paying down the revolving debt and the rest into an emergency account. Good luck!
My husband has gone back to school full-time and I’m the only one working full-time. Some months we are very short on money and need to take out of his student loan. Should we be trying to save anything at all? It is very difficult to do so, but at times I think we should.
Monica, if you are borrowing money to save money, that doggy don’t hunt. It doesn’t work. I see people do this all the time. Don’t do it. Focus on paying down the debt, and try and save something each month, even if it’s just $100 a month.
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