| | help | Part 2: Getting rid of credit card debt
Clark Howard, WSB-TV consumer adviser
Part 1: Getting out of debt
Are you buried under a mountain of credit card debt?
It happens for a variety of reasons: job change, medical problems, or maybe you just aren't very good with money. Don't worry.
Consumer adviser Clark Howard has the shovel to help dig you out of debt.
"You want to pop a bottle of champagne, it's unbelievable how good it feels," says Steve Eubanks, who is now debt free.
He and his wife, Debbie, dug themselves out from under $30,000 worth of credit card debt. What was their secret? "We really started paying attention to where our money was going," she says.
That's the first step to geting debt free. You have to identify all of your expenses. Cut anything that isn't essential. Then make a budget and stick to it.
Next, take those credit cards and cut them up. If that's too drastic, put them in a bag of water and freeze them. Only thaw them when you need to use them. And if you're only making minimum payments, it's time to get help. "If you don't have enough money to pay this month's bills and you start to incur future debt to pay this month's bills, that's the kiss of death," warns Steve Eubanks.
That's when they need to turn to Consumer Credit Counseling of Atlanta, says Suzanne Boas. The company offers a free debt management program that can help you gain control of your finances. How? By negotiating lower interest rates, and putting you on a strict budget.
"We try to get a workable plan that can get the consumer out of debt in 36 months, typically," says Suzanne Boas.
"Yeah, it's bad that you screwed up and got yourself in debt. It's worse if you stay there," notes Steve Eubanks, another client.
Author Marc Eisenson has an amazing formula for getting rid of debt. He calls it, "twice as often, twice as good." Here's how it works:
Lets' say you owe $3,500 bucks on a card, and your only able to pay the $70 minimum payment. It would take more than 35 years to pay it off. Eisenson instead says split that payment by paying $35 on the 14th, and $35 on the may 28th due date. If you continue making the same $35 payment every 2 weeks, you'll pay that card off in less than 7 years. How? Cheating the calendar saves you in interest, and every penny makes a difference.
Just ask Mike Latella, who is currently credit card debt free. "Every night I come home, the first place I go is to dump the change in that machine."
That change quickly adds up to a way to pay off your debt. At the end of each day, take your change and set it aside, or the end of each purchase, put your change away and use only paper money for everything you do, you'd be amazed how much you can save.
Clark volunteered Team Clark Howard to count Mike's coins. In just two years, he's saved $511.85.Steve and Debbie are counting coins too. "We are able to build some savings, and plan for retirement, which is something we were unable to do.
Now if you enroll in a debt repayment plan, it could show up as a negative mark on your credit report. It all depends on how the credit card company reports it. Equifax tells us you could be pro-active and put a notation on your credit report yourself.
But, Clark stresses, if you can't handle plastic, stick to a cash only budget. Set a budget and stick to it. If you run out of money, that's it! That's how you get debt free. |
|
| |
