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November 12, 2006
Basics of Getting Out of Debt
The basics of becoming free of credit card and credit line debt starts with you getting organized.
To get out of debt you must start by taking an inventory of your existing debt. This can be done with an excel spreadsheet or even a pen and paper.
It is a good idea to call your bank to make sure you are taking into account all amounts owing or better yet order a credit bureau report to get a view of everything you owe.
Once you have your entire debt load written down make note of the highest interest debts and the debts where you owe the least amount of money.
The first strategy to becoming debt free is to start making higher than minimum payments on the highest interest debts.
If two debts owing are roughly bearing the same interest rate, you are best to start paying off the debt with the least amount owing. By paying off the debt where you owe less you will be able to pay it off faster and this will give you a sense of accomplishment.
When you have one debt paid off, take what you where paying to eliminate that debt and begin paying that amount plus what you were paying initially, this will accelerate the pay-off of your larger debt.
When you do this, you get on an upward spiral of debt pay-off versus the downward spiral of accruing more interest charges.
I will provide you with more information on how to accelerate your debt freedom over the next few weeks and months.
One note before I sign-off for the day, with Christmas and holiday shopping upon us, keep your gift purchasing under control. Quite often it is the holiday season that causes consumers to begin the debt downward spiral. When you are out shopping keep your spending to a minimum and find creative and personal gifts to give. Maybe consider making gifts yourself. After all the holiday season is more about getting together with loved ones than spending a fortune.
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