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Can you imagine being free of debt? No more sleepless nights over mounting credit card balances and mortgage interest piling up, no more debt feeding your anxieties, and no chance of threats from collection agencies. You can do it. Here's how -- in one minute! 1:00 Resolve to spend less than you make Make it a habit as fundamental as tying your shoes. Realize that if you can't pay for it today -- you can't afford it--it would just be more clutter in your life and home. 0:55 Distinguish between BAD Debt and GOOD Debt OK Debt has an interest rate well under 10% -- preferably with some tax advantages. In the best case, what you bought with borrowed funds will appreciate in value. Home mortgages and student loans are examples of OK Debt, since they increase your net worth. Automobile loans are on the border: They often satisfy the low-rate piece, but automobiles almost never appreciate in value (classic cars excluded). Bad Debt is everything else -- from your platinum credit card to the 25% interest loan from Super Cash Mart. 0:50 Pick a winning card Out of all your cards, pick the one or two credit cards that feature the lowest annual interest rate and annual fees. If you don't have a winner, our advanced card search compares and sorts all credit cards by intro rate, annual fee, time periods, benefit ratings, and what type of card you want. Select what you are looking for and this quick credit card comparison tool will pull up The Winning Card for you. As for all the other plastic cards in your wallet, remove temptation by taking them out. Throw them behind a major appliance, freeze them in a bowl of water, or decoupage them to a shoebox. Do whatever it takes not to use them, but don't cancel them since that may lower your credit score. 0:41 Gather the latest bills from all Bad Debt accounts Line these up on the kitchen table. Find the minimum monthly payment for each account and then add these up to get an overall monthly minimum. Pledge to pay this overall minimum PLUS a hefty additional chunk every month -- enough to make a solid dent in the outstanding balance of at least one account. If you can't pull this off, you'll have to make a drastic move to increase your income or lower your expenses. It's harsh, we know, but it's also a fact; you may have to cancel cable and netflixs for a year or so to get things back on track. 0:34 Pick the highest interest rate account and: Kill! Next, order the latest bills according to annual interest rate charged. Apply the "big additional chunk" (beyond the minimum) to the highest interest rate account(s). Repeat this process monthly until the last Bad Debt account is paid in full. 0:26 Ask, beg, and demand a lower interest rate Grab a bill from any account charging you more than 14% interest. Dial the toll-free number on the bill and ask to have your rate reduced -- say, to 11%. Tell them that you\'d really like to stay with them out of customer loyalty (embellish according to your acting skills), but that you have received offers for much-lower-rate cards. Expect to be made very uncomfortable, but stand firm and remember that you are both a customer and a profit center. You also stand to save a bundle. The more calls you make, the more persuasive you'll become. 0:18 Be stingent Be aggressive in paying down Bad Debt, but don't get so ambitious that you risk missing minimum payments on your mortgage, automobile, or any other secured credit account. (Secured means that if you miss enough payments, the bank can show up and take away your stuff.) 0:12 Discuss ideas with others Tell your friends and family what your up to, see if they have any more tricks up their sleeves. Here you can see a side-by-side credit card comparison tool if you aren't as sure what you want. 0:05 Dance You're done when the Bad Debt is 100% gone and you can make remaining Good Debt payments with ease, leaving plenty of budget room for savings and no more wild shopping sprees, please. Published: Wednesday 15th of October 2008 05:18:31 PM For more information on credit cards and related topics, please see our library of articles. 
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