If you're struggling with debt, clearly you're not alone. Being debt-free takes resolve and a little know-how. We'll help you get on the right track, starting with these seven steps.
Step 1: Separate "Bad Debt" and "Okay Debt"
How can you tell the difference? "Okay debt" has an interest rate under 10 percent -- preferably with tax advantages to boot. In the best-case scenario, the thing you bought with borrowed funds will appreciate in value (think mortgage and even that student loan). "Bad debt" is everything else -- especially credit card debt.
Step 2: Don't Pay by Their Rules
The "minimum amount due" is cleverly calculated to keep you beholden to The Man for your entire adult life. A $4,500 balance on a card with an 11-percent APR will take 44 years to pay off, even if you don't put another dime on the card. Oh, and the interest you'll pay on that loan? A whopping $17,000! That's why you're going to pay by your rules. Keep reading.
Step 3: Get Intimate With Your Visa
Gather your bills and clear a space at the kitchen table to line them up. Rank your cards from the lowest to the highest interest rate. Identify the one major credit card with the lowest annual interest rate and room for a balance transfer. See which high-interest rate cards you can phase out of your life and move to the low-interest card.
Step 4: Play the Heavy With Your Existing Lenders
Grab a bill from any account charging you more than 14-percent interest and ask to have your rate lowered to 11 percent. Say you've received offers for much lower-rate cards. Your lender would rather keep you as a customer than pay $50 to $200 to find your replacement. Plus, studies show that more than half of the customers who tried to negotiate lower interest rates had some success.
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