60-Second Guide to Getting out of Debt
60-Second Guide to Getting out of Debt
by JR Rooney
Imaginefor a second being free of debt -- no more sleepless nights overmounting credit card balances, no more ball-and-chain of debt feedingyour anxieties, and no chance of threats from dreaded collectionagencies. You can do it! Here's the scoop -- in one minute flat.
0:60 Resolve to spend less than you make! Make it a habit asfundamental as brushing your teeth. Realize once and for all that ifyou can't pay for it today -- you can't afford it.
0:55 Distinguish between Bad Debt and OK Debt. OK Debt has an interestrate well under 10% -- preferably with some tax advantages to boot. Inthe best case, what you bought with borrowed funds will appreciate invalue. Home mortgages and student loans are examples of OK Debt.Automobile loans are on the border: They often satisfy the low-ratepiece, but automobiles almost never appreciate in value. Bad Debt iseverything else -- from your titanium credit card to the 35% loan fromKarl's Kwik Kash.
0:50 Pick a winner. Out of all your cards, pick the one or two majorcredit cards that feature the lowest annual interest rate. Resolve touse those cards for emergencies only. As for all the other plastic palsin your wallet, remove temptation by taking them out of your wallet.Throw them behind a major appliance, freeze them in a bowl of water, orput them to a shoe box. Do whatever it takes not to use them.
0:41 Gather all the bills from your accounts. Line these up on thekitchen table. Find the minimum monthly payment for each account andthen add these up to get an overall monthly minimum. Make a decision topay this overall minimum PLUS a hefty additional chunk every month --enough to make a solid dent in the outstanding balance of at least oneaccount. If you can't pull this off, you'll have to make a drastic moveto increase your income or lower your expenses. It's harsh, we know,but it's also an inescapable fact.
0:34 Pick the highest interest rate account and: Attack! Next, orderthe latest bills according to annual interest rate charged. Apply the"hefty additional chunk" (beyond the minimum) to the highest rateaccount(s). Repeat this process monthly until the last Bad Debt accountis paid in full.
0:26 Ask for a lower interest rate. Grab a bill from any accountcharging you more than 14% interest. Call the toll-free number on thebill and demand to have your rate reduced -- say, to 11%. Tell themthat you'd really like to stay with them out of customer loyalty(embellish according to your acting skills), but that you have receivedoffers for much-lower-rate cards. Expect to be made very uncomfortable,but stand firm and remember that, to them, you are both a customer anda cash cow. You also stand to save a bundle. Practice makes perfect.
0:18 Be prudent. Be aggressive in paying down the cards, but don't getso ambitious that you risk missing minimum payments on your mortgage,automobile, or any other secured credit account. (Secured means that ifyou miss enough payments, the bank can show up and take away the item.)
0:12 Commiserate with others. You'll find plenty of emotional supportand great ideas by visiting debt relief discussion boards. Help otherscelebrate their debt-free "happy dance."
0:05 Dance, Fool! You're done when the Bad Debt is 100% exorcised andyou can make remaining OK Debt payments with ease, leaving plenty ofbudget room for savings.
JR Rooney writes articles about Credit and collections. JR has 10 years experience working for a bill Collection Agency. Take it from JR you don't want to end up dealing with a Collection Company.
by JR Rooney
Imaginefor a second being free of debt -- no more sleepless nights overmounting credit card balances, no more ball-and-chain of debt feedingyour anxieties, and no chance of threats from dreaded collectionagencies. You can do it! Here's the scoop -- in one minute flat.
0:60 Resolve to spend less than you make! Make it a habit asfundamental as brushing your teeth. Realize once and for all that ifyou can't pay for it today -- you can't afford it.
0:55 Distinguish between Bad Debt and OK Debt. OK Debt has an interestrate well under 10% -- preferably with some tax advantages to boot. Inthe best case, what you bought with borrowed funds will appreciate invalue. Home mortgages and student loans are examples of OK Debt.Automobile loans are on the border: They often satisfy the low-ratepiece, but automobiles almost never appreciate in value. Bad Debt iseverything else -- from your titanium credit card to the 35% loan fromKarl's Kwik Kash.
0:50 Pick a winner. Out of all your cards, pick the one or two majorcredit cards that feature the lowest annual interest rate. Resolve touse those cards for emergencies only. As for all the other plastic palsin your wallet, remove temptation by taking them out of your wallet.Throw them behind a major appliance, freeze them in a bowl of water, orput them to a shoe box. Do whatever it takes not to use them.
0:41 Gather all the bills from your accounts. Line these up on thekitchen table. Find the minimum monthly payment for each account andthen add these up to get an overall monthly minimum. Make a decision topay this overall minimum PLUS a hefty additional chunk every month --enough to make a solid dent in the outstanding balance of at least oneaccount. If you can't pull this off, you'll have to make a drastic moveto increase your income or lower your expenses. It's harsh, we know,but it's also an inescapable fact.
0:34 Pick the highest interest rate account and: Attack! Next, orderthe latest bills according to annual interest rate charged. Apply the"hefty additional chunk" (beyond the minimum) to the highest rateaccount(s). Repeat this process monthly until the last Bad Debt accountis paid in full.
0:26 Ask for a lower interest rate. Grab a bill from any accountcharging you more than 14% interest. Call the toll-free number on thebill and demand to have your rate reduced -- say, to 11%. Tell themthat you'd really like to stay with them out of customer loyalty(embellish according to your acting skills), but that you have receivedoffers for much-lower-rate cards. Expect to be made very uncomfortable,but stand firm and remember that, to them, you are both a customer anda cash cow. You also stand to save a bundle. Practice makes perfect.
0:18 Be prudent. Be aggressive in paying down the cards, but don't getso ambitious that you risk missing minimum payments on your mortgage,automobile, or any other secured credit account. (Secured means that ifyou miss enough payments, the bank can show up and take away the item.)
0:12 Commiserate with others. You'll find plenty of emotional supportand great ideas by visiting debt relief discussion boards. Help otherscelebrate their debt-free "happy dance."
0:05 Dance, Fool! You're done when the Bad Debt is 100% exorcised andyou can make remaining OK Debt payments with ease, leaving plenty ofbudget room for savings.
JR Rooney writes articles about Credit and collections. JR has 10 years experience working for a bill Collection Agency. Take it from JR you don't want to end up dealing with a Collection Company.
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Regards
Sandy
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