by Brad Homer
So you want to eliminate your debt, starting with those pesky debt cards? Here's a step by step plan for becoming debt free quickly and legally...no dodgy recommendations here.
Step 1: Stop Using Your Debt Cards
A worthy goal for every debt-ridden consumer on planet earth: Become and stay debt free! You can start right now by eliminating the debt card habit cold turkey. We’ve been conditioned by debt card marketing for many decades now to think we can’t survive without our pretty pieces of plastic – we can! Don’t let the debt card peddlers leech off of your future earnings. They’re really debt cards, not credit cards. The cards do you no credit - they just sink you into a smelly pile of debt. Stop using them and get on the road to being debt free.
Step 2: Tally up your balances and minimum monthly payments
You need to know where you are with your debts before you can plan when you can eliminate them. Use your recent statements and/or call each card company and find out what your current balance is and what interest rate you are paying on that balance. Write these numbers down in a list.
Step 3: Contact the Debt Card Companies
While you’re getting your current balance and interest rate from the debt card companies, ask them for an interest rate deduction. If you’ve paid your account on time for at least six months, most debt card companies will do this. Don’t tell them you’re planning to pay them off and don’t cancel them just yet – they may raise the interest rate on you. They’re not on your side. They’re not your friend. They just want your money. Do be polite and kind to the people you talk to though - they probably don’t like the company they work for any more than you do! If you’re behind on a payment, getting current is a priority! – tell them in this case that you’re creating a plan to get current on paying them and ask them if they can do anything to work with you.
Step 4: Organize Your 'Hit' List
Paying off the cards with the highest interest rate first will save you the most money, but you can organize your debt payoff priority list any way you want. For example, paying off a card with a small balance first might help you feel like you’ve accomplished something more than slugging away for a couple of years on the debt card with a $10,000 balance.
Step 5: Pay Off the Card at the Top of Your List, As Quickly As You Can
In other words, pay the minimum on all the other cards in your list and focus your effort on your debt card enemy #1. As soon as it's paid off - cancel it! Throw an inexpensive but fun party for yourself and your loved ones to celebrate!
Step 6: Apply what you were paying towards the card in step 5 towards your next card
In Millionaire 2020™, this is what is known as using The Debt Hammer™!
Step 7: Repeat Steps 5 and 6 until no more cards are left.
Following this simple strategy for debt card elimination can greatly reduce the time it takes for you to become debt free. When you eliminate those debt cards on an accelerated schedule, it can also save you thousands of dollars!
For example, if you have three debt cards totaling $20,592 with APRs of 21.99, 19.5 and 15.9% respectively, it will take you about 10 years to pay them off if you simply keep paying your current monthly payment until all three are paid off. If you continually reduce the monthly payment on each card to match the minimum, it will take MUCH longer. If you use a rapid debt pay off plan like the Debt Hammer, you will cut that 10 years in half and you will save yourself over $50,000 in interest!
Eliminating your debt cards isn’t complicated. It may take some discipline, but becoming debt card free promises dramatic financial benefits as well as peace of mind that’s priceless.
Millionaire 2020™ includes The Debt Hammer™ which can help you accomplish the above and get you on the path to good budgeting.