Tip of the Day January 16, 2009

You Need a Plan to Get out of Debt

If you have decided 2009 is the year you are going to get rid of that credit card debt, then, before they year gets too much older, you need a plan. Without a plan all you've done is made a decision. To get rid of that debt completely you need to act on that decision and you need a plan to do that.

Here are my rules for the Payment Push (the fastest way to get out of debt that I know):

1. Stop using that card. Put it away, somewhere safe. You are not going to be using it.
2. Make this month's payment every month. You are going to keep on paying this month's payment every month and ignore the minimum required payment on your statement. This month's payment is now the fixed monthly payment for that account.
3. Make a list. Get all your credit cards and other debts and make a list of them, from smallest to largest.
4. Keep on paying. Once you have finally paid off the credit card, add the payment to the fixed payment for your next smallest debt and keep on paying. When that one is gone for good, add the payment to the next smallest debt and keep on paying. Do you see the pattern here?

Keep repeating this process until you are totally debt free.