5 strategies to eliminating credit card debt

5 strategies to eliminate credit card debt:

1) Put your debts in writing

Many people struggling with credit card debt have absolutely no idea exactly how much they owe. Instead they "guesstimate" about their total bills -- and often they're way off with their numbers. I made this mistake when I was in debt, and it allowed me to stay in denial (and in debt!) for far too long. It wasn't until I took an honest about my predicament -- by list all my bills in black and white, and putting everything in writing -- that I got serious about knocking out the debt.

Website resource: www.MyFico.com

People can get their credit reports and FICO credit scores from www.myfico.com . That's where you'll see all your credit accounts listed -- mortgages, student loans, car notes, credit cards, everything. You may even find "old bills," personal loans, or collection accounts that you conveniently forgot about. But the creditors haven't!

2) Negotiate with creditors

Most consumers don't realize that they can call up their credit card companies, request a lower interest rate, and get a "Yes". In fact, one study from Synergistics found that 75% of all consumers who ask for a lower rate, get it -- right on the spot. When I was deep in debt, I successfully negotiated all of my credit card interest rates down to 6.9% and lower. (I had leverage with my creditors because I'd never missed a single payment). I was also able to get several cards down to 4.9%, a few at 2.9% and even a couple at 0%. This saved me thousands of dollars in interest/finance charges. If someone has a creditor who won't budge on the interest rate, they should consider switching cards.

Website resource: www.BankRate.com is a good place to comparison shop for the best credit card rates availalble.

3) Use windfalls properly

Anyone trying to become debt-free really has to use "windfalls" carefully. A "windfall" is any "extra" money that one comes into, outside of your normal paycheck. It could be a year-end bonus on the job, an income tax refund check, a stimulus payment from the government, or even life insurance proceeds or a settlement from a divorce. These big chunks of money can go a long way toward knocking out debt that would otherwise take years to pay off. For example, the IRS says the average tax refund check tops $2,500. If you get such a windfall, you should use it to pay down debt. Don't blow the money!

Website resource: www.IRS.gov

If you do happen to get a big tax refund check each year, realize that you're actually giving the government an interest-free loan. A better strategy is to adjust your W-9 withholdings at work, so that your employer takes less money out of each one of your paychecks. The typical person getting a $2,500 tax refund check can put get about $200 per month back into his or her paycheck by adjusting their witholdings. Use that extra cash each month to eliminate debt. The IRS's website, www.IRS.gov, has detailed instructions on how to adjust your withholdings.

4) Become a smart shopper

The main reason I got into debt is that I was a classic over-spending -- on everything from clothes to travel to gifts for my kids. For lots of women, in particular, their spending problem is tied to their desire to "look good," so they go out buying all these designer clothes or shopping at high end stores that they can't really afford. These days, even though, I'm financial stable and debt-free, I won't go into the expensive retailers or buy these just because it has a fancy/well-known label. Instead, I shop for clothes that are nice, yet affordable in places like H&M or Lane Bryant.

Website resource. www.RightFit.com

Most women know how hard it is to find great career clothes, or even a nice-fitting pair of jeans, without spending a small fortune. At www.RightFit.com, you can find really cute clothes for less, regardless of whether you're a size 2, 12 or even a 22. I'm talking about fashionable jeans that cost $25 to $45, for example, as opposed to paying $100 or $200 in a lot of stores.

5) Get financial help

Too many people facing financial difficulties allow shame and embarrassment at their predicament to keep them from reaching out for help. In my situation, I was fortunate in that I was a financial reporter, so I was often in contact with lots of financial experts -- everyone from stockbrokers to Certified Financial Planners to CPAs. They taught me a lot, and eventually I learned what I had to do to get out of debt in terms of budgeting, and managing credit and debt wisely. Unfortunately, most of us weren't taught these financial basics as children, or even in school. But that shouldn't stop us from learning them now. Better late than never.

Website resource: www.NFDM.org

The National Foundation for Debt Management, www.nfdm.org , is an excellent, reputable non-profit agency that helps people overcome debt problems. It's a HUD-certified credit counseling agency. They teach consumers financial literacy skills, they negotiate with creditors on your behalf to lower your interest rates or monthly payments, and they'll help you set up a re-payment plan, if necessary, to quickly pay down your debts.

The Money Coach's 5 tips to avoid debt

Follow these five tips to stay out of debt in 2008, and start off the New Year in good financial shape!

Tip#1: Think Like a Recessionista

Unfortunately, too many people - especially women shoppers - try to emulate celebrities and fashionistas, when they should really become "recessionistas." A recessionista is a person who loves to be fashionable - but is also very budget-conscious. And the #1 rule of being a Good Recessionista is: Shop Where the Deals Are. If you must hit the stores, you'll stretch your dollars and do less damage to your credit cards if you're at, say, Fashion Bug or Lane Bryant versus Nordstrom and Bloomingdales, for instance.

Tip #2 Consider Layaway (Yes, Layaway!)

Layaway was a big practice back in the 1980s. It allowed people to buy merchandise over time, as a way to better budget and avoid going into debt. In the 1990s, however, layaway plans fell out of favor, mainly because people would much rather use a credit card and get an item now - as opposed to paying for it gradually and having the merchandise sit in a store. With this tough economy, however, lots of stores are offering layaway as an option for cash-strapped customers. K-Mart is doing TV ads to promote its layaway program. Other stores offering layaway include Marshalls, TJ Maxx, and Burlington Coat Factory. Most of them require that you pay a $5 fee, put 10% down, then make payments over several weeks.

If you wouldn't be caught dead leaving a layaway counter, no problem: Just shop from home. Get online at www.e-layaway.com to find online layaway deals from more than 1,000 merchants. The good part about layaway is that it promotes budgeting and delayed gratification - two positive financial habits that most Americans have not practiced for years.

Tip#3: Take a Budget and a Buddy

People who are watching their wallets should always go shopping with two things: a budget and a buddy. The budget is your pre-determined amount of how much you can afford to spend in cash. If you do use credit, set a maximum that you can pay off in two or three month's time maximum. Your buddy's job is to keep you accountable. She's the girlfriend who's going to go with you to the mall and remind you not to overspend and go into debt. It's also her role to get you out of the stores once you've hit your limit.

Tip #4: Use a Stop Watch

You can do a lot of damage to your wallet and to your credit cards by spending hours upon hours in the mall or shopping all day long. Instead, trying setting a time limit on your shopping excursions. A good way to do it is to use a ticking stop watch - or any kind of device with a bell, timer, beeper, or ring tone - that you can set for a fixed, brief period of time. A good time limit is 1 hour. 2 hours maximum. You can set your stop watch so that it "rings" in one hour, and then you have a verbal/auditory reminder that it's time to put and end to the shopping for the day.

Tip #5: Try the 24-Hour Rule

One of the dirty little secrets of the holidays is that people often get into debt buying gifts for themselves - not just for others. Many times people get caught up in holiday merriment, or else they think: "I deserve this." Then they wind up with a lot of stuff they never even use or want - simply because they gave in to an impulse to buy something that struck their fancy on a whim. To avoid such impulse splurges, try implementing the "24 Hour Rule." This means that whenever you feel the urge to buy something - large or small - because you get that "I have to have it, now!" feeling, try walking away from the item instead. The idea is to give yourself a "cooling off" period. Tell yourself: "If I still REALLY want it tomorrow, I can always come back and get it." Often, that "I've got to have it" feeling will pass, and you'll find that you can live without whatever you were initially hot and heavy to get.

About The Money Coach
Lynnette Khalfani-Cox, The Money Coach™, is a personal finance expert and the author of The Money Coach's Guide to Your First Million (McGraw Hill), Investing Success: How To Conquer 30 Costly Mistakes & Multiply Your Wealth! and the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom (Advantage World Press). A sequel to Zero Debt, called Zero Debt for College Grads: From Student Loans to Financial Freedom, debuted in 2007 from Kaplan Publishing. Lynnette's latest book is called Your First Home: The Smart Way to Get It and Keep It.

As an award-winning financial news journalist, Lynnette worked for nearly a decade as a Dow Jones Newswires reporter and a Wall Street Journal reporter for CNBC. At CNBC, Lynnette filed weekly television segments on personal finances, investing and small business, and conducted online chat sessions on CNBC.com.

Lynnette has interviewed thousands of financial experts, and personally paid off more than $100,000 in credit card debt and nearly $40,000 in student loans before turning her financial life around. Now she shares the secrets to wealth with audiences nationwide, using insights based not just on her professional knowledge, but also on first-hand experience.

A popular keynote speaker, Lynnette also conducts workshops about credit and debt, money management, real estate, investing and entrepreneurship. Lynnette is a frequent guest on national TV and radio programs, and has been featured in The New York Times, USA Today, Redbook, Essence, and on The Oprah Winfrey Show, Dr. Phil, The Tyra Banks Show, The Rachael Ray Show, Tavis Smiley, as well as the Emmy award-winning reality program "Starting Over."

When she's not chasing after her three young kids, Lynnette is developing two PBS pledge specials, based around her books Zero Debt and The Money Coach's Guide to Your First Million. She is also presently a Money Coach for AOL, where she dispenses her unique brand of personal finance wisdom. For more information about Lynnette as an AOL Money Coach, and for free financial tips, visit .

Lynnette earned a Master of Arts degree in Journalism from the University of Southern California, and a Bachelor of Arts degree in English from the University of California, Irvine.

For more information, visit www.themoneycoach.net.

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