In Debt?  Follow these tips to get out of debt fast.

There are such things as good debt vs. bad debt.  Educational expenses and mortgages are considered good debt, since the underlying asset (education and real estate) should increase over time.  However, an expensive new car or consumer debt ( New stereo's, etc.) are not good debt since these are things that are not making you money and are depreciating in value. 

Own a home?  Consolidate Your Debt & Save $1000's.  Bad Credit OK!

If you have credit card debt, and want to be debt free, use these tips:

First, call all your credit card companies and negotiate a lower interest rate.  They will usually lower if for you if you threaten to transfer the balance, even if you don't think you can.  By lowering your interest rate, you are lowering your overall interest costs.  Think of interest like running up a downward moving escalator.  The slower it is moving against you, the easier it is to get to the top.  Interest works the same way, the lower the interest rate the faster you can climb out of debt since you are paying more money towards your principal.

Next, go from the highest interest rate card to the lowest one.  If the lower ones have available balances on them, transfer balances from the higher to the lower ones first.  You can apply and get a 0% interest credit card here.  (Also, American Express is offering a lifetime 3.9% interest balance transfer option when you sign up for the Blue Card, however you need to have great credit scores).  When you have transferred everything to the lowest possible interest rate, you are ready to make a plan to pay back your debt.

Start paying back the credit card with the highest interest rate first, while only paying the minimum balance on all your other credit cards.  After the highest one is paid off, continue on the process until all your cards are paid off. 

If you still need to charge new things, only charge it on the lowest rate credit card.  If you have a credit card with no balance, use this first and make sure you pay it off every month.  Remember, if you are carrying a balance on a credit card, the credit card company will start charging you interest the very second you buy something.  Most people don't understand this and pay way too much interest on their credit cards.  If you don't carry a balance, credit card companies will not charge you interest as long as you pay your balance in full every month.  They are in the business to make money, and by understanding the rules you can keep your interest costs low.

If you own a home, check and see what the rate would be for taking out a Home Equity Loan.

The key things to understand about home equity loans are:

Interest is tax deductible, so figure your tax rate as part of your interest calculation.  For example if a home equity loan has a  10% interest rate, and you are at a 30% tax bracket, the interest is really 7% compared to a 10% credit card interest rate, even though both rates seem equal at 10% each.  THEY ARE NOT, and this is very important to understand.

Other tips on how to get out of credit card debt:.

• You can also borrow from your 401k without any penalties to pay back your credit card debt.  If you borrow from your 401k, you still pay interest, however you pay the interest back to yourself - which is much better than giving it to the credit card company, and the interest is usually around 6%, much lower than most credit card interest..  This is another great alternative if you don't have access to a home equity loan.  Another positive benefit is that the payments are automatically deducted from your paycheck, so you don't have to think about it every month

• If you have any savings or stocks, we would recommend to stop saving and start paying back your debt if your debt interest rate is higher than 10%.  Remember, there is not much chance you can get 10% + after tax guaranteed return on your savings investments, which is what you are really paying to keep your debt every month.  Most investors would love a 10% guaranteed return, so you really should pay back your debt before starting to save.  By doing this you are really giving yourself the 10% return and not to the credit card company.  We have have so many people getting 1% interest on their savings accounts, while paying 10+% interest on their credit card debt, it just doesn't make any sense.

Own a home?  Consolidate Your Debt & Save $1000's.  Bad Credit OK!

Too Much Debt?  Get Professional Help

What a Creditor can and can't do to you:

• Remember, an unsecured creditor (credit cards, medical bills, etc.) can threaten you with all sorts of nasty things.  We have heard threats including calling your boss, closing your bank account, putting you in jail, etc.  However, they can't actually do any of these things, these are all ploys to get you to pay.  Remember, they get paid a % of what they collect, that is why they are so aggressive because for them there is a lot of money to make if they collect and old debt.  All they can really do is ruin your credit or sue you for the money.  You will never go to jail for not paying your credit card debt.

• If you debt is old, negotiate to pay back 40% of the original debt and go up from there.  However, make sure when you do agree to a number to pay off your debt, you get in writing that the company will remove any negative history from your credit report as a condition of you paying back the debt.  If you wait until after you pay back the debt, they won't have any incentive to fix your credit report and score.  Make sure you get it in writing, this way the negative history will not affect you credit score which will help you in the future by getting you cheaper home and car loans.

If you are overwhelmed by too many options and need professional help:

• If you have no other options or savings, and would like somebody to help you get out of debt, we recommend you use a Professional Debt Services Company that will negotiate a debt plan for you with  your creditors.  Although this will cost you more money, it may be very helpful to have somebody with you as you try and get out of debt.

Remember, always try and put yourself on a plan to get out of debt yourself first, you can do it!

Own a home?  Consolidate Your Debt & Save $1000's.  Bad Credit OK!

Too Much Debt?  Get Professional Help