by William Bond

Created on: January 02, 2009

You must try to control your long-term debt or it will hurt your financial life. There are basically two different types of long term debts: Good debt which will build equity for you, and bad debts, such as credit cards, or store credit cards, which you continually pay monthly, and they never go down, year after year, and when the interest rates increase, this is be even harder to save money monthly and build your net worth, and improve you chances of building a sound financial retirement plan for yourself and your family. Let's look at some ideas to help you cut your bad long-term debt.

Cut your credit cards use to a minimum. Living without a credit card is difficult today, but to be able to cut your payments on credit cards, you must find ways to pay for normal living expenses by using cash, then you will not get a statement which is higher and higher each month, and you will soon find that you cannot meet the minimum payments on your credit cards. Write down on a sheet of paper what purchases you are making daily on you credit cards, and try during 2009 to cut your credit cards by paying your gasoline purchases, daily expenses at the local stores, buying sodas, and others daily expenses by simply using cash. This is the key to cutting our use of credit cards, by putting them away at home, and having cash with you for daily purchases.

The first payment you pay monthly is your rent or your mortgage for your house. These are good debts, because a house is an investment, you will be able to sell it once you pay it off, and get another house, or go into a condo, and you could have money left over for your retirement fund.

Another important good debt is money you spend on your education, the degree you obtained to get the job in finance, or accounting, or teaching, computer analyst, or human resourses administrator or any other field. This debt will help you find the job of your dreams, and earn you the money to run your life, and pay dividents, all your life. A college degree might mean the difference between earning $500,000 in your lifetime or earning well over a million dollars in lifetime income. So you can see that this investment in you education is a strong, good debt that you can be rewarded for during the rest of your life.

The way to build a successful financial life for yourself, means to to build, the best possible FICO credit score, this can be a score betweenn 350-950 points, and the score is based on your credit report, which includes how fast you pay back your debt, whether or you have exceeded you credit limit on you credit cards or other credit issued to you with a limit, whether or not you pay the minimum on all credit card payment due monthly, and whether of not you use less than 30% of each credit limit you have on you credit cards or other credit. Never pay late, it will cost you in fees, and it will also effect your FICO credit score. With a good FICO credit score you will be able to get additional credit, at a lower finance rate, and save money on mortgage rates, bank loans, and other credit purhases.

The key is to keep your credit history strong, to get the best rates and terms, and this will give you additional money to pay off the good debts such as mortgages for you house, being able to refinance your mortgage, which is at the lowest rate in over 30 years, and be able to go back to school to get the extra training you need to get the better paying job or career that matches you interests and skill. Become the best financial manager to manage your credit and pay off successfully for both your good debts and you bad debts. Invest money into your 40l(k) at work, this will build your retirement fund for your later years.

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