Debt Elimination Success Seminar
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Section 1
A Look at Debt
History of Debt
Credit Card History
Current State of Debt
How You Got Into Debt
Good Debt Bad Debt
Business vs. Personal Debt
Section 2 Dealing With Your Money
The Two Step Plan
Doing The Two-Step
Step One
Step Two
The Paths Out of Debt
1- Create a Debt Payment Plan
2- Neogtiate Better Rates & Terms
a.Consolidation Loans
b.Consumer Credit Counseling Services
3- Negotiate Lump-Sum Settlements
4- Bankruptcy
5- The Easy Way
6- Win $1,000,000
Living Debt-Free
Manage Your Money
Make More Money
Save Money
SameMoney-MoreFun
Stay Debt-Free
You as a Business
Section 3 Dealing With Your Creditors
Alerts/Scams
The Credit Industry
Credit Industry
The Fine Print
The Secondary Debt Market
The Debt Collection Process
Original Creditor
The Charge-Off
Collection Agency
Legal Problems
Dirty Creditor Tricks
Dealing with Debt Collectors
Dealing with Debt Collectors
Statute of Limitations
Cease and Desist Letter
Section 4
The Credit Report
The Credit Report
Credit Score
Credit Repair
Section 5
Dealing With Yourself
The Critical Factor
The Art of Prosperity
The End of Failure
Prosperity Coaching
Section 6
Kids and Money
Kids and Money
How to Pay for College
Section 7
Debt Information
Bookstore
Debt Facts
Radio Show
Resources
About Us
Privacy Policy
Site Map
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Consumer Credit Counseling Services |
Host: Tom Allen
Guest: Susannah Strong from MyDebtCounselor.com
Get Out of Debt Faster
Tom: I’m Tom Allen and I hate debt. I invite you to make the decision today to join with me in living a debt-free and prosperous life. Getting and staying out of debt requires a workable plan. Fortunately it only takes a few minutes put one together. With the help of Susannah Strong from MyDebtCounselor.com we’re going to help you put one together one right now. Get your pencil and paper ready. Susannah in your opinion what is first step in putting together a getting out of debt plan?
Susannah: There are several ways to get out of debt. My favorite is what’s called laddering its spelled l-a-d-d-e-r-i-n-g. What you do is you is place all your bills in front of you.
Tom: So first step, I guess, is get your bills.
Susannah: Yes, get your bills. Go to the draw pull out your bills put them all in front of you and highlight or circle what the APR is, the annual percentage rate.
Tom: OK
Susannah: And determine which one is the highest. Now this is gonna sound weird but you want to pay your minimum payment on all of the credit cards expect the one with the highest interest. With that said any amount that you have to spend on the debt, any extra money, has to go to that one with the highest interest. Now you do this until any one of the accounts is paid off. Let’s pretend you had an account at 18% and you had a couple others at 10% and one of the 10% accounts was paid off. You would take that amount, I’ve got to backtrack a little bit.
Tom: OK
Susannah: Pick a fixed amount, that minimum payment amount, and once it’s down and paid off take that minimum payment amount on the one that was paid off and put it toward the one with the highest interest so that you’re constantly putting more money to the one with the highest interest. It’s costing you the most to have a balance one so you want to pay it off first.
Tom: So let me see if I have this right. We’re getting all of our bills out. We’re finding out how much we owe on every bill and what the percentage rate the annual percentage rate of each bill is. So then we’re making a list and then we’re prioritizing them based upon their percentage rate.
Susannah: Correct.
Tom: Then even though in the past we may have been making more than minimum payments on more than one bill and that’s what a lot of people do in an effort to try and get ahead but they’re finding that it just isn’t working. We’re gonna concentrate on one bill and one bill only. So only minimum payments will be made on all of your bills expect for the one bill that you’re focusing on and that one you’re going to attack with everything that you’ve got including coming up with ways to come up with an extra ten dollars, twenty-five, fifty, a hundred dollars a month to put towards that bill to get rid of it and finish it off forever.
Susannah: Right. Now the very, very difficult part of this, it takes so much discipline is when you’ve paid off one of the lower balance accounts taking that money and putting it towards the higher interest account. A lot of people say “Well it’s not due anymore so I don’t need to do anything.”
Tom: So they’re going to go spend it.
Susannah: If you don’t do that laddering will not work. I need to repeat that if you don’t do that laddering will not work.
Tom: So then once bill number one is done we’re taking all of the money that we were spending on bill number and then applying that to what had been the minimum monthly payment on bill number two and then we’re attacking bill number two as vigorously as we can.
Susannah: Yes. As long as we’re saying bill number two is the highest interest. Yes.
Tom: Yes.
Susannah: Now there are other ways you can do it too. For instance if you have really good credit you probably get a lot of those offer in the mail for balance transfers. I get them, I’m sure you get them, and a lot of people do get them.
Tom: Yes.
Susannah: When you have a brand new company coming to you and saying we are going to offer you this great credit card with no annual fee and x amount of percentage rate a lot of times they’ll say x amount until its paid off until the balance it paid off which is great. Sometimes they’ll say 0 percent for a year and then 9.9 after that which is still going to beat the 18% that you’re looking at on this other card.
Tom: Sure
Susannah: See if you can balance transfer it. Now once you have the balance transfer done, completed, you do not want to use that card.
Tom: That is the key isn’t it?
Susannah: They start to mix these interest rates up. They’ll end up paying your lower interest rate first and you’re going to have your higher interest rate balance sitting there and sitting there and sitting there unpaid. So you’ve gotta make sure that you don’t use the card once you’ve done the balance transfer. Similarly if you already have a balance on a card and they’re offering you a better interest rate to bring more money over to that card don’t do it because you have a balance on the card. You never want to have two separate balances on the card.
Tom: This can be a very good way to accelerate your getting out of debt plan but it is a bit of playing with fire you have to be very, very careful transferring a balance from a high card to a brand new card with a zero or low percent interest rate can be a very good thing to do but only and only if you don’t use that card for anything else until well, for anything else ever really, but especially until you get that balance transfer paid off because if you do use it then you just blow the whole concept.
Susannah: Right and they want you to use it and I hate to say it but there are actually offers out there where they’ll do that. They’ll say hay bring this balance over and we’ll give you it to you for 4.9 until it’s paid off if you spend three hundred dollars in this next year on this card. Well then they’ve just made you do want you want you’re not supposed to do.
Tom: You’ve got to read the fine print.
Susannah: Exactly, you’ve just hit the nail on the head.
Tom: If you don’t think you can control yourself and not use the card then don’t do it.
Susannah: Exactly, exactly. Similarly another way to get out of debt would be the home equity line of credit or home equity loan like people might say. That’s a very, very good way to get out of debt. But you have to make sure that you’re in the situation to do that. If you have three months living expenses in the bank ready to go and your ready to put you house up against this unsecured debt because you’re turning unsecured debt into secured debt then go ahead and do it. But it can be very risky and you have to make sure you’re financially stable to do that. I see these wonderful interest rates and people sort of go for it and then unfortunately they lose a job or have a medical problem or whatever it is and suddenly now their house has a lien on what was credit card debt and that’s just a shame.
Tom: Yes. So again if you want to take advantage of an opportunity like refinancing your house which can be a fabulous way to go about getting out of debt you have to be extremely careful because if you are not careful if you go back and pay off your credit cards and then play with your mind and think I can use them just a little bit I’ll be sure and pay the balance off, and oh I’ll carry just a little balance because its not that big of a deal and before you know it they’re maxed out again you’re actually in much worse shape than you were and if you haven’t gotten that self-control yet then just don’t do it pay your debts straight out.
Susannah: I see it time and time again with our agency where we have people who’ve done that either with a loan against their home or just a regular personal loan or signature loan that’s not considered a secure loan against their home where they say, “I’ve got this loan I’m going to pay it off,” and unfortunately about two years later average is two years I see them back.
Tom: Well Susannah for those of us gotten the financial control, made the decision that we’re going to get out of debt, put together our little laddering plan here we’ve got all of our debts laid out we’ve got them prioritized we know which one we’re going to attack first which one we’re going to attack second all the way down the line until they’re gone. In your experience how long does it take to really get rid of the credit card debts if you stop creating new debt?
Susannah: The average is about four to five years I would say.
Tom: It’s not that long is it?
Susannah: No and without it if you just continue to make just plain minimum payments on all the cards we’re finding the average is closer to fifteen years. Even with relatively good interest rates it can be that bad. Generally people don’t have all good interest rate cards. I’ve seen it before but not always so, yea, we say four to five years you’ll be out of debt on your own if you ladder and you do not falter from the plan.
Tom: So what we’re talking about is making a difference in at least ten years of your life living in a debt-free manner where you can then take and now here’s the exciting part about the laddering plan is that once you get all of your debts paid off then you can take the money that you had been paying to your credit cards companies for stuff that you bought months and months ago that you don’t even know if you have anymore and you can start to put that in income producing assets, into stocks, into real estate, into something that going to make you money, and in the next five to ten years you’re going to find that those payments that we’re going to credit card companies have accumulated to such a great deal that you know you may be able to you know share those words you’ve been wanting to with your boss. And say, “Good-bye, don’t need you anymore. Best of luck with your new employee.” It really makes an extreme difference in your life.
Susannah: We see a lot of clients who’ve paid off their debts and then we strongly encourage them to get together with a financial planner but also begin to have that money direct deposited into a savings account. So they were used to paying four hundred dollars or what ever it is on their debt they’re used to not having that four hundred dollars a month.
Tom: You don’t miss it if you had been paying it to pay bills and now it’s going into a stock account the money that coming for you to buy groceries and your walking around money is still the same so nothing has changed except instead of being in debt you’re getting rich, a big difference.
Susannah: Absolutely and most people’s income has increased in that period of time too so they’re better off all ways.
Tom: We’re going to talk about other ways to get out of debt in our next segment. Susannah Strong from MyDebtCounselor.com will be back with us to share some more great information. For more information on getting out of debt visit IHateDebt.com you can email me at debt@ihatedebt.com or again visit IHateDebt.com.
Susannah Strong from MyDebtCounselor.com Get Out of Debt Faster
CareOne Consumer Credit Counseling Services
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Or you can mail in your contribution.