Part 18 (2/2)

Wo?”

Author: ”Yes!”

This skit goes on, but you get the idea The spoof infomercial says if you order now you can receive the additional book, Seriously, If You Don't Have the Money, Don't Buy it, along with a 12-azine

The point is to stop the buying and borrowing behavior that got you into debt in the first place

How to Get Out of Debt, 1-2-3

1 Quit borrowingMoney

If your debt is growing, there are only two explanations You're spending too much money, which this book should be able to help with Or, you have an inco necessities on the card because you don'tout the reason for running up credit card debt is the first step toward ain

The culprit of debt is often credit cards If you can't trust yourself with credit cards, stop using them-cut them up, freeze them in a block of ice in your freezer, whatever Just don't close accounts because that will hurt your credit score

Well- people will advise you to transfer balances to lower-rate cards or continually surf the balance fro is not inherently bad, but it's not nearly as effective as actually paying down the card balances Surfing ht even add to debt by incurring transfer fees

For people in deep debt, it's like the olddeck chairs on the titanic It doesn't address that sinking feeling

So, unless you have a credit card at et a substantially lower rate, focus your energy on payingMoney

This ood thing, right?

The probles are earning for you For exa 18 percent interest on your credit card debt and earning less than 5 percent on savings That's a huge net loss

In a sis account earns you 250 a year, which the government then taxes But if you used that 5,000 to pay down an 18 percent-interest credit card, you save 900 And you pay no tax on that kind of savings

In fact, after you have a starter eency fund of 2,500, you can use other saved ain, it5 or 6 percent while paying double-digit interest on debt

A possible exception to the ”Quit Saving” rule is if you have an autos plan, such as a 401(k), 403(b), or automatic deposits to a Roth IRA If that kind of plan is already on autopilot with 10 percent or less of your income, you can leave it alone A definite exception is if your employer matches your contributions in a retirement plan You want to capture all of that free et intense about paying off your debt, stopping retireet you out of debt faster

3 Pay Small Debts First

How do you prioritize which debts to pay extra on? The biggest debt or shest interest rate or lowest?

I like a hybrid plan that goes like this:Pay off debts of less than 1,000 first, fro reater than 1,000 fro minimums on others

Each time you kill off a debt, you apply that payment to the next debt When that's done, you roll the combined total into the next debt, and so on That's the debt sobll

This debt-repayment plan is a modified version of a plan espoused by Dave Ramsey, a radio-show host and author of The Total Money Makeover He didn't invent the idea of paying debts s them, but he's best known for it

Of course, hest interest-rate debts first to avoid paying the ical

But getting out of debt is a lot like dieting It's difficult and takes a huge helping of self-discipline By paying off small debts first, you can wipe out a nu traction and succeeding It's the atta-boy or atta-girl to help you keep going and pay offthe first days of a diet It gives you encouragement to continue

So much with money has more to do hat's between our ears than what's in our wallets The e out small debts is orth whatever s first on a huge high-interest debt that takes years to eliet rid of those se debts, you'll be better off paying more attention to the interest rate For example, you would pay off a 10,000 credit-card balance at 18 percent before paying off a 9,000 auto loan at 7 percent

Here are answers to soe?