Get a Handle on Your Debt

Don’t Take on New Debt
It may sound cliché, but you can’t get out of a hole if you continue to dig. Stop all unnecessary spending and retire your credit cards until you can pay them off. Don’t take on any new loans, either (if your car breaks down, repair it). From now until your credit cards are paid in full, you should only be using cash for what you need.
Cut up all your credit cards except for one to keep for emergencies, and leave it out of your wallet to avoid temptations. Don’t close the accounts entirely – that could impact your credit score negatively. Avoid putting it on ice as well, which could damage the magnetic strip.

If you’re intent on paying off your debt rapidly, go back and review the Spending Freeze phase. The more you’re able to cut out of your budget now, the quicker you’ll be back on your feet financially.

Lower Your Rates
As we discussed in step #27, if you have a good FICO score (720 or higher) you may be able to qualify for lower credit card rates. Make sure you call all your lenders to request one. Sometimes it’s as simple as making a phone call. Because of so much competition in the credit card industry, your company will want to retain you as a customer.

Here’s a sample script:
“Hello, this is (Your Name). I’ve been a good customer of yours for years and have been getting offers in the mail from other credit card companies with lower APRs. I would like a lower rate, otherwise I will cancel my account with you and get another card. Is there anything you can do to help me out?”

More than half the time, customers who call end up with lower rates. If you don’t get the answer you want the first time you call, try another day. If that still doesn’t work, you may be tempted to shop around for a new card. This should only be done with extreme care and with full knowledge of possible pitfalls such as:

• Balance transfer fees
• Short introductory period low APRs
• Transferring too often can lower your credit score
• Low credit limits can lower your credit score
• Be wary of the Universal Default clause which states that if you are late in paying any bill, your APR on an unrelated card could rise

As always, read the fine print. In the end, the hassle, fees, and uncertainly of transferring balances often isn’t worth it.

Create a Debt Spreadsheet
Collect all your current credit card statements and other bills in which you carry a balance. Create a spreadsheet (Excel works well) so that you can track your progress as you pay down your debt. Here is a sample of how to set up your spreadsheet:

Column A: Name of the Creditor/Account
Column B: Interest Rate
Column C: Balance Remaining
Column D: Minimum Monthly Payment
Column E: Budgeted Monthly Payment

Add the totals in columns C, D. You’ll then have a clear picture of your total amount of debt and the minimum amount required to stay current with your payments. In the next step, we’ll look at how much to allocate to each bill (column E) to come up with your debt repayment plan. However, it will be your goal to put as much extra money as possible towards your monthly debt payments.

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I don't know how i keep doing this!! I've been one step ahead for like the last 4 steps!! grr i did this last week as well lol! i re do my debt spreadsheet about every 3 months.
i have to or i get bored with it. and by creating a new one, i'm forced to look at all my debt in plain view once again.

great steps kim!!

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My choices yesterday create my today. My choices today create my tomorrow.

Forget the Joneses Holiday Boot Camp Blog

but I will look. I have no idea what this computer has on it besides my email and pictures of the baby. I guess I know it has solitare too!
I am not a computer savvy person... but I am trying.

If you don't have Excel, most likely you have a generic Works program that should be just fine.

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Woo-Hoo! I'm on this step already! I've been doing it since Dec, and NO new Debt has been accrued on our cards since then either (That in itself is an awesome feeling).

I don't have a debt spreadsheet, I have it in a notebook (old fashioned I am) but I do have a snowball created on What's the cost.com and put in new payments and it shows me how much longer I have to pay things off (I am down to 22 months for all (bad) debt right now).

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Well that was easy I just called to inquire what my rate was and they lowered it for me. I didn't even have to ask.

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Kimberly Proud Mommy to Bethany Rose April 2006 &

Organizer of the Coupon Clippers of Tacoma

Should this spreadsheet include mortgage loans? Car notes? or just Credit Cards?

I would say just credit cards. Get those paid off first, then concentrate on building up your emergency fund/retirement before considering paying off a mortgage early. However, if you're behind on any car/home payments, make sure that you're current on those.

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I have a binder that I do my budgeting in but I was really wanting to put our debt in the spreadsheet.

Is there anything that is free online that I can the same or close to the same thing with? Once we get a little more of our debt paid off I will find a spreadsheet program.
By the way, it would have to be simple to use or I couldn't do it.

Are you sure your computer doesn't come with a spreadsheet program pre-installed? Most computers do.

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