Get Out of Debt Guide

Debt consolidation is the most efficient and effective way to become debt-free. However, you can also supplement debt consolidation with efforts of your own. Here are some things you can do.

Change the Way You Use Your Plastic

To get and stay debt-free, you don’t necessarily have to cut up your credit cards for good, but you do have to make changes in how you use them.  After debt consolidation, think about making these changes to how you use your plastic:

• Use cash only.  Psychologically, using cash can be a great reminder that you’re spending real money.  Go to the ATM once per week to take out what you need for your daily expenses.  Limit daily spending to this amount. 
• Don’t close credit card accounts.  Even though you won’t be using them, don’t close your credit card accounts because it might damage your credit score.
• Leave the plastic at home.  Don’t carry your credit cards with you.  Keep them in a safe place that you can’t access easily.
• Keep debit cards as your plan B.  Use cash first.  When you can’t use cash, such as for online purchases, use a debit card, not a credit card.

Pay Down Balances

If after debt consolidation you have existing balances, use these strategies:

• Crunch the numbers.  For each credit card, find out exactly what you owe, the minimum monthly payment, and the interest rate.  This will help you prioritize your payments.
• Pay high-interest cards first.  Always pay the highest interest rate balance off first, then work down.
• Make automatic payments.  Have your payments automatically withdrawn from your checking/savings account to guarantee your bills will be paid on time.

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