Feb212006
My Top Ten Tips for Getting Out of Debt
Believe it or not, I’ve been in debt. BIG DEBT. I mean, there were times when I would look for things to sell just to pay the bills.
It was the worst feeling in the world!
I always had stacks of unpaid bills, creditors calling me and a real uneasy feeling in my stomach. And I wasn’t the only one. It seemed like everyone I knew had the same problem.
The truth is, debt has reached epic proportions in our society. Whether you’re rich, poor, or somewhere in the middle, chances are you’ve got debt that’s working against your dreams of financial independence.
But it doesn’t have to be that way. In fact, I want you to take some action today to start getting out of debt. You’ll be AMAZED at how much better you feel when you don’t have bills hanging over your head. (And you don’t have to win the Powerball jackpot to get out of even the most unbearable debt!)
I’ve been there, and now I’m debt free. Here a few tips I used a long the way:
1. If you’re in over your head with multiple credit card accounts, you need to destroy your cards right away. Just keep one card for emergencies. Remember, credit cards have compounded interest – so you actually get charged interest ON INTEREST! So, don’t use them unless you can pay them.
2. Pay more than the minimum payment every month – in fact, pay as much as you can. Money in your account isn’t making you money as fast as your unpaid credit card debt is losing you money!
3. Pay off the credit card with the highest interest rate first and pay the rest in descending order. If you tackle the biggest money drain right away you could make a huge impact on your cash flow in a matter of one month.
4. After you pay off one credit card, don’t let up. Apply the money you’ve been paying that particular company to paying off another credit card or another outstanding bill. Set a “credit pay-off budget” and stick to it as you pay down cards. Once you get to the last one, it will seem easy!
5. Don’t “rotate” your debts – pay every one every month. It’s easy to pay a few on time one month, and switch around for the next month. That just keeps you further behind.
6. If you own a home, consider taking out a home equity loan. You could save hundreds, possibly thousands of dollars by paying off your high-interest credit debt by moving those balances into a fixed-rate home equity loan.
7. Pay additional money towards your mortgage principal. This can add up to tens of thousands of dollars!
8. Open a savings account or an IRA with some of the funds you were dedicating to a now-paid credit card. Special tax-protected investments like an IRA can save you thousands in taxes over the years.
9. Consider debt consolidation. It could help you to consolidate and pay your debt off more quickly. Beware of companies that make unbelievable promises about "fixing" your credit, though – at best, they can be very expensive. At worst, they can be fraudulent. You might be best off consulting with a reliable non-profit credit counseling agency first, such as Debt Counselors of America (DCA) – www.dca.org/.
10. If you need help along the way, contact the Consumer Credit Counseling Service (1-800-388-2227). They will help you organize and consolidate your debt.
I know you’re focused on financial success and maximizing your wealth. Don’t overlook how much your debt can undermine your efforts to get ahead. If you take even a few of these tips to heart, you’ll soon be well on your way to a debt free, financially successful future. I know you can do it!
Warmly,
Russ
Founder of Winning in the Cash Flow Business
The Dalbey Education Institute
P.S. This article is also available at the RepairCreditAmerica.com website. Click here for the link.
Founder of Winning in the Cash Flow Business
Thank You!
Who would know better than you – someone who has come up in the ranks. I am in that situation and getting ready for a possible equity loan.
March 25th, 2006 at 11:24 pm
Russ is so very right here, and everyone who has credit card debt should take this to heart.
I was fortunate to hear the same advice many years ago and was able to pay off those money sucking credit cards. Now I only have one, which I pay every month, and only use on trips instead of carrying cash.
I think the key item above is to get a pair of scissors and CUT THEM UP!!!
If you tell yourself you’ll “just put them in a drawer and not use them,” this will work for a small period of time, then temptation to purchase something you ‘really need’ and don’t have the cash for will make you use the card again and stay in the hole financially.
Sure, you have to start living by your present income instead of using plastic to get by, but once you pay the cards off and see how much better you feel, and how you’ve managed to live on a budget without credit cards, you’re on your way to financial independence.
March 31st, 2006 at 11:57 am
Yes, keep only one card for reservation & sevices…..but keep one small ..a few hundred bucks..for online sales, where you may be afraid to give a card # with $20,ooo.00 available….use a debit card..then you will think twice on spending and not go in debt…Rod
January 26th, 2010 at 1:11 pm