The dirty secrets of debt reduction

re: The dirty secrets of debt reduction

Denis — Mon, 20 Jul 2009 04:39:45 GMT

omg...i guess im not the only one out there with debt.

re: The dirty secrets of debt reduction

Martin — Thu, 21 Aug 2008 14:26:23 GMT

Hi Karen. Great post. I am learning that good money management requires discipline. A lesson that is coming to me late in life at 36. But better late than never.

I now owe what feels like a small fortune but have started to do something about it. I am even writing about it at mydebtdiary.wordpress.com partly as therapy, partly to help others and share experiences.

We done for sharing your story and advice and hope to read more soon.

re: The dirty secrets of debt reduction

EK — Wed, 20 Aug 2008 20:36:13 GMT

Kudos to you on paying off your debts. I have a similar story of graduating from school with almost $15K in credit card debt plus student loans. I have been fortunate to be able to afford to pay off all of the CC debt in the last 18 months. I did it much the same way cutting back on spending, sacrificing luxuries and allocating a fixed amount of money to my debt every month.

Its been tough at times, but its a wonderful feeling to no longer have the weight of those debts on my shoulders.

re: The dirty secrets of debt reduction

dale — Wed, 20 Aug 2008 16:54:19 GMT

I too finally figured it out ,Ii paid off my house and three cars i only have two credit cards left 1 with $2000 and one with $7500 it feels great to be almost debt free and it only took me 4 years!

re: The dirty secrets of debt reduction

Daniell Fedron — Wed, 20 Aug 2008 15:24:35 GMT

Great stuff here J. D. I would tell those in need to follow your system. There is no doubt in my mind your system of debt elimination would work. It is a mental thing. You just have to keep playing, like you say, and stay in the game till the end.

Daniell Fedron

re: The dirty secrets of debt reduction

DebMc — Wed, 20 Aug 2008 15:01:34 GMT

Why don't they teach this stuff in school? Most people graduating from high school don't even know what a checking account is. Yet they are expected to succeed financially. Quite frankly I don't think the financial institutions want this taught in school they are in the business of putting their hand in your pocket first (collecting interest). So when my husband and I got into a mess and started fishing ourselves out. We showed both our children our credit card statements credit report etc. this has made both of them cautious. My son at 23 was able to purchase a home not rent.

We should be lobbying for courses in finance to start being taught at, at least a high school level if not sooner. We would not have the economic mess we have now if everyone was better educated in these areas. By the way great job! I 'm on my way I figure I have about another year to go.

re: The dirty secrets of debt reduction

Glen R. Nottage — Wed, 20 Aug 2008 04:06:55 GMT

Spot on solid advice! I'm a financial advisor/planner and also do not agree with many of the financial gurus that you should pay off debts with the highest interest rates first. I've long held the view that you should pay off the lower balances first, then tackle the larger. It's so amazing, my wife and I were just talking about this on the way home tonight!

re: The dirty secrets of debt reduction

Mary — Wed, 20 Aug 2008 02:13:50 GMT

I worked for a big collections office. Once it gets into collections you can settle your debt and if they do not want to work with you as soon as it comes into their office then give it time, say about 3-6 months and call them back and they should be willing to work with you. DO NOT GO THROUGH A CREDIT COUNSELING COMPANY all they will do is call the collections office and settle your debt for you and this is something you can do yourself and save yourself even more money in the end because you wont have to pay the CCC "fees" and etc. for their services. They dont want you to know that you can settle your debts yourself, when you speak with a collections office just because the first person you spoke with was rude, they are not the "bad people" call back and try again and honestly if you have the money right then and there push for 50% of the balance of whatever you owe. Thanks and god bless.

re: The dirty secrets of debt reduction

MZ — Tue, 19 Aug 2008 21:07:20 GMT

Great article! Many of the things that JD mentions I put into practice

one year ago. I had 15K of debt, trimmed the expenses, sold the car with

some asset value, have been driving a clunker, renting small cheap and clean

living quarters, working so much I only have time to shop for groceries, and

consider a splurge now and then, in line with the GOAL! NO DEBT. Setting a

goal is crucial. Staying away from the items that snake charm money out of

your wallet...crucial. I posted a photo of my grandparents in their victory

garden in the 40's on my wall. They raised 9 college educated children iduring

the depression/WW2 with NO DEBT. Our generation can do it TOO!! So can

our kids. I will be debt free in September. YAHOO!

re: The dirty secrets of debt reduction

Dawn — Tue, 19 Aug 2008 19:22:43 GMT

Your story and mine are basically identical.

Here is what helped us that I didn't see in your list.

1) Watch out for balance transfer offers. A lower interest rate is great, but the fee to get there is a bit much on some cards. If you decide to take advantage of these offers here are some tips.

a) Check the fees, most have a cap of $75 or the like. If you are consolidating multiple accounts to one balance transfer, write yourself a check then pay from your checking account. You will end up paying the $75 just once vs. 40-50 for each transfer if you do them separately.

b) ONLY use a balance transfer to an account you have already paid off. The way they apply payments to the account benefits them not you. Take the guess work out of the payment order by just having the balance you transferred on the card. ALSO, don't charge to this card till it is paid off.

c) Setup auto payments to this card. If you are a day late the entire balance will shoot up to the max interest rate. Avoid that by setting up a default minimum payment, and then send extra payments as you get $.

2) If you are tempted to spend money if you go shopping, then simply don't go into stores. Yes, it is boring to be at home vs out, but it is also much cheaper. If you can't trust yourself in the store, then don't put yourself in the situation.

3) Plan Splurges. If you are all good all the time, you will break. Plan small controlled spurges like 1 fancy dinner out, or one new pair of shoes. Then make the spurge an event and a celebration of being good.

4) Maintenance - After you have everything paid off, then what? I don't have the discipline to be good all the time, so when debt creeps up a bit, we declare a month of being extra good. We are currently in the midst of "austere august". The only non essential expense this month is our planned splurge night out. A month here and there of watching every expense has kept us on a good path for years now.

Good Luck.