Paying off debt is one if not the most popular New Year’s resolution people make at the beginning of the year. Debt is the single most crippling aspect of our society. No other country spends beyond their means like Americans do. Banks and retail stores make it easy and enticing for us to use credit cards for purchases. And just as easy as it is to flash our card for a purchase, it’s just as easy to pile up the debt.
I’ve been there. I know what its like. At one point in my life I was paying my household bills with my credit cards because I didn’t have enough money in the bank. I was drowning in debt.
I tried different tactics to pay down debt or at least survive for another month or two:
Revolving Debt– This is where you keep moving debt from one card to another for a lower interest rate.
Credit Card Consolidation– Companies specializing in helping you with your debt. They promised to cut your debt in half by negotiating with your credit cards, but even though they might get you a lower rate, you will be paying for it long after the time they quote.
Many people think that they just don’t make enough money, but that’s not true. If you add up what you are paying to your credit cards per month, you may be surprised that you have several hundred dollars flying out the door.
There is no greater freedom that not having debt.
I want to help you get a handle on your debt and get it paid off. Why do I feel I can help you with this?
Because I paid off $10,000 of debt in 6 months.
But first things first. How much debt do you have? This isn’t a guessing game. Sit down with a few sheets of paper and write everything out. You will get depressed and want to run for the hills, but I promise you, knowledge is key.
On one sheet of paper, write out every bill you need to pay just to survive such as:
- Gas for the car
- Car insurance
On a second sheet of paper, make 4 columns for your credit cards:
- First column is the credit card name
- Second column is the balance of each card
- Third column is the minimum card payment
- Fourth column is the due date
- Fifth column is the interest rate
I want you to take a hard look at this sheet. This is why you don’t have any money. Your money is gone before your paycheck is cashed. The first sheet is what you have to pay to live, but the second is what is crippling your bank account.
How are we going to eliminate this debt?
There are several ways we are going to illuminate your debt.
- Call your credit card companies and ask if they can lower your interest rate.
- Do any of your cards have a promotional rate of zero percent interest for a year? Transfer what you can if they do. Do not transfer if the promotional rate is good only for 3 months. Do your best to pay this card off during the promotion time period.
- Pay off the smallest credit card balance first (highlighted in yellow above) and pay the minimum to the others. Why? Because once one card is paid off, you can move the amount that you were paying to the next card, which in turn will pay the next one off faster.
- Once a card is paid off, cancel it or put it in a drawer for emergencies only. Do not use it.
Sounds simple enough right?
To succeed at this, there’s still two more things you need to do on a continuous basis:
#1- Write out your living expenses and credit card debt every month. This will show you that you are chipping away at your debt.
#2- Limit your spending.
My next post will be suggestions on how you can limit your spending, so you don’t accumulate the same debt you are working hard to pay off.
***Disclosure: I did have to make up my credit card numbers because I have been debt free for the past 3 years using this system***