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Oct 31, 2008 10:45 pm US/Eastern
Consumer Report: Paying Down Your Debt
NEW YORK (CBS) ―
In this tough economy, millions of Americans are using their credit cards, and they are racking up tens of thousands of dollars in debt.
Alres Sewell is drowning in debt, $45,000 in credit cards alone.
She's renting an apartment in Fairlawn, NJ but is also paying for a dream home in Georgia – one that she's now trying to sell. In over her head, she keeps paying credit card bills late.
"My [biggest] concern is to have my mortgage paid – so when the market gets good, I can sell it," Sewell said.
Sewell reached out for CBS 2, so financial expert and author Lynette Khalfani-Cox has some suggestions.
"She definitely could make up some of her shortfall with a second job or part-time job," Khalfani-Cox said.
And after examining her bills, Khalfani-Cox quickly found secret money that Sewell was overlooking with her income tax refund.
"I would get $6,000," Sewell said.
First, Khalfani-Cox advised Sewell to changer her W-4 withholdings at work.
"In her case, she can get $500 a month," Khalfani-Cox said.
Then, she recommended that Sewell restructure how she pays her bills, pinpointing the following changes so she could start to pay down her debt.
First, she suggested Sewell evaluate insurance carriers and raise her deductibles.
She also told Sewell that she should purchase a used car and sell off her brand new 2008 model, pocketing the difference.
Finally, Khalfani-Cox advised Sewell to renegotiate for lower interest rates on her credit cards, which had hit default rates, of 25 percent or more.
Experts suggest writing down all of your debt in black and white so you can set up a plan to pay it off.
They also say call your credit card companies to change the payment date, so that it doesn't conflict with your mortgage or rent payment.
For free assistance on how to solve your money problems, click on Links & Numbers on the left hand side of this website to find a non-profit debt management organization, as well as to the IRS to find out more on how to change your tax with-holding.
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