Unless you are a lender, nobody really likes debt. Sure some debt is good debt, like a mortgage on your house. It helps you get something you most likely would not be able to save up and purchase otherwise. On the other hand, bad debt is just a drain on your balance sheet. Perhaps the worst of the bad debt is credit card debt. This carries the highest interest rates you will see, often borderline usurious. And considering that the average credit card debt is a little over $7,000 per person, it is time more people sit down and make a plan to get rid of their debt.
Before you go any further, you need to stop putting things on your card. Absolutely no more charging until the debt is taken care of. Go to a cash only system if you need to but, make sure the only new charges on the card are interest charges. Once you have made this resolve make a list of all your debts. Each row will be listed a different debt, such as MasterCard, Student Loans, Mortgage, etc. Next to the name of the debt, write down the interest rate you are paying on the debt. Next to that, mark how much the minimum monthly payments are. Now arrange your list so that the debt with the highest interest rate is at the top of the list. You now have a clear picture of what your debts are, and the top of the list should be your priority.
Now is the time to call your credit card company. Talk with the customer service and tell them that you have a written plan on how to get them paid back. You will be able to return their money to them faster, and be able to go back to using your card sooner (this is key, they want those swipe fees), if you they are willing to reduce your interest rate. Initially try to get your rate down to zero, but if you can get it cut in half, that is better than where you are now. Make sure you have done your research and have a 0% balance transfer credit card ready to go, disclose that you are ready to transfer the balance away from them if they cannot work anything out.
If you do transfer to a new card that offers an introductory rate of 0%, read the fine print. Many cards will offer this rate for the first year, but after that the rate will skyrocket to close to 30%. The best way to get out of debt the fastest is to pay off your debt before your introductory rate expires, because often there is a clause that says if you carry any sort of balance even one day past the end of your introductory period, you will owe the interest that would have accumulated during that period. So before you transfer your balance, be ready to pay off your entire debt.
Now that you have a list of all your debts, and you have transferred the highest rate one into a 0% for a year card; use your Miser for a Month tactics to pay it off as quickly as possible. You will cut back on everything unnecessary, and knock out that debt. Do what Joe Mihalic did, and drastically increase your net worth. Just be aware that while you are paying down your debt quickly, you still need to save for emergencies.
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