How to Get
Out of Debt Fast
Follow this foolproof
advice and you'll be back on solid ground before you know it!
By Jean
Chatzky
 |
Photo by: Feng Yu |
You know the feeling:
The bills are piling up, but you're so far behind, you can't bear to
open them. When you do, you realize there's only enough in your
account to make the minimum payments.
You've got plenty of
company. The average American family is now carrying between $8,000
and $9,000 in credit card debt alone. We owe more on our homes, cars,
and educations than any previous generation has. But there's a lot you
can do to improve your own debt picture. In fact, with the following
plan, you can get rid of your debt or, at the very least, a
significant chunk of it in just a few months. Let's get
started.
1. Take stock.
Sit down at the computer or
with a pencil and paper and make a list of whom you owe money to, how
much you owe, and what rate of interest you're paying on each of those
debts. The main culprits will be your credit cards. The cards with the
highest interest rates are costing you the most, so you need to work
on those first.
2. Get a better credit card
deal.
Pick up the phone, call the toll-free number on the back
of each card, and ask the customer service representative if there's
anything he or she can do to lower your current rate. More than half
the time, you'll achieve success with this simple phone call,
according to one study.
Then try to consolidate your debt onto
a single card with an interest rate lower than what your current cards
are charging you. You'll lower your monthly payments and pay off cards
quicker.
3. Check your credit score.
This number
represents how reliable you are when it comes to paying back money
you've borrowed. A high score will help you qualify for one of those
low-interest credit cards. (Your score may also affect how much you'll
pay for auto and homeowners' insurance; it may be a factor in whether
you can rent an apartment or whether you can get a job.)
You
can find out what your score is from myfico.com for $14.95. Somewhat like SAT scores,
the number will range from 300 to 800 points. Anything over 660 is
good, and a score over 720 is great. If it's below 660, you'll need to
spend a few months improving it before you can get a better interest
rate (see
How to Improve Your Credit Score).