#60-Second Guide to Getting out of Debt
By Motley Fool Staff | More Articles
Imagine being free of debt — no more sleepless nights over mounting credit card balances, no more ball-and-chain of debt feeding your anxieties, and no chance of threats from dreaded collection agencies. You can do it! Here’s the scoop — in one minute flat.
0:60 Resolve to spend less than you make
If you have ok debt then you are not debt free. Debt is debt no bad no good. Just good or bad company’s that offer credit. If you want to get out of debt make sure you cancel all of your credit cards first. (you don’t need credit when your debt free) then you should focus your effort on the smallest bill. Pay it off and then work on the next one higher. until you have no payments with anyone. Then you are living below your means the way you should be and truely debt free. No one can take your car or house when you own it.
I agree with the article, paying off the highest interest rate card makes a lot of sense. I don’t need the instant gratification, as I can manage a $150 balance with say 18 percent interest. What I personally did was pay off the highest balance with the highest interest rate so the large balances got worked on first. This worked for me and my husband. I think each family is different and they should look at the balances and the rates and make choices of which to work on first but going with the highest interest rate would be first on my list with the highest balance.
Either way best regards to all who are working on this and getting their families out of debt and back on track.
This is how I started. I looked at what I was spending money on and where I can cut back and control. I got rid of the cable,cell phones, and take out. I literally saved 480.00 a month by not having these. (cable 180,phones(2) 100, and takout 200) I saved for 2 months 960 and put it in my safe. Then I looked at all my other bills past due and present. I started paying the smallest first. ( 100) I had like 8 of these between my wife and I. That made me feel great. Then I looked at the ones that were 500. and figured on paycheck can knock them out. So everytime I got paid i would pay the bills that we had to keep on rent electric gas car payment ect. and took the rest and just paid one bill. When we got thru with them. the only thing I had left was my car loan 15k So every dollar I made I sent to them. It took me 5 months to pay off my car. Because I paid the smaller ones first. Now I am saving for a house and going to buy it cash no loan no debt. With this recession I see people struggling. Because of the debt not because of their job. It’s the debt that kills most of us.
We almost maxed out our 401k and planned on paying off debt with the tax savings and income the next year, then we had all kinds of disasters from 2 hospital stays and operations and hail storm damage and copays. Then my husband got layed off the year we were going to pay the debts off. We spent every extra penny paying on debt on one credit card and a car. We had charged everything to the card then took a zero interest rate.
Then the credit card company decided to raise our interest to the maximum interest rate of 31% that is allowed by our state. We did not hesitate, we took our money out of our IRA and paid off every penny we owed.
You would not believe how much free money we have now, since we aren’t making payments. We still have insurances, utilities, groceries and gas, but we have enough money that we don’t have to use the credit card. We did keep one card that we pay off monthly for times when we need one to call an order in, etc.
No more than anyone is getting for interest, everyone should pay off the credit car, if they can.
I agree with truthisntstupid. Be a cash payin’ customer all the way. For those that want to pay down the debt, set up a little Excel spreadsheet of your debt and and track your debt reduction plan. Each pay day, update the spreadsheet with your current balances and chart a graph. Set your spending based on needs only with cash, and devise an agressive debt pay-down plan based on this 60-Second article. Writing it down and updating it constantly will encourage you to stay on track for the big prize of living without debt. It’s well worth it.
But don’t you think that it’s even better to get at the core of the debt-driven behavior by first setting up a quick budget and working from there to identify how to structure debt reduction into one’s monthly expenditures? What are your thoughts on The Five-Minute Rough, Quick Budget. ?
BEWARE: These get out of debt companies can be a total scam. They are out to get money just like anyone else. Trust me I know! I was in debt up to my eye balls.
I talked to some of these debt companies and thank god I am smart enough to notice a scam or stupid solution when I hear it. Did not go that route. What I did with my- 4 credit cards- which totalled: 25 thousand— yes $25,000 in debt, I refinanced our home. This was the answer for us. We got a 4 3/4 interest rate, paid off all the debt, plus our one car payment, and walked away with our house payment (the only major payment we have)now being $700 less than before! Yes, we were paid down pretty good before on our home- but that’s okay. We are now free our car payment, credit card debt and can sleep like babies cuz we have nothing to worry about. The only catch is, you have to have at least a 700+ credit score to get a good interest rate with a lender. Thank God I kept current on my payments. That makes a big difference. If you can swing it, refinace and get yourself out of all the debt. I am in such relief to be finally debt free (except for our home mortgage). I only hope others will do the same and live, finally, in peace.
PS: I posted previously, PLEASE BEWARE of some of the people posting above, trying to lure you into a solution. They want your business because they of course get a commision off of you cuz it’s their job. RESEARCH before you commit to a debt consolidator!!