Get out of Debt and Debt Help in Connecticut, Debt Payoff in Connecticut

Imagine being free of debt -- no more sleepless nights over mounting credit card balances, no more ball-and-chain of debt feeding your anxieties, and no chance of threats from dreaded collection agencies. You can do it! Here's the scoop -- in one minute flat.

Make it a habit as fundamental as stopping for red lights. Realize once and for all that if you can't pay for it today -- you can't afford it.

OK Debt has an interest rate well under 10% -- preferably with some tax advantages to boot. In the best case, what you bought with borrowed funds will appreciate in value. Home mortgages and student loans are examples of OK Debt. Automobile loans are on the border: They often satisfy the low-rate piece, but automobiles almost never appreciate in value. Bad Debt is everything else -- from your titanium credit card to the 35% loan from Larry's Kwik Kash.

Out of all your cards, pick the one or two major credit cards that feature the lowest annual interest rate. Resolve to use those cards for emergencies only. As for all the other plastic pals in your wallet, remove temptation by taking them out of your wallet. 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.

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 an inescapable fact.

Get your bills in order in Connecticut

Next, order the latest bills according to annual interest rate charged. Apply the "hefty additional chunk" (beyond the minimum) to the highest rate account(s). Repeat this process monthly until the last Bad Debt account is paid in full.

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, to them, 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.

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.)

These seven steps can help reduce your debt load:

• Start today. According to the Cambridge Consumer Credit Index, paying off debt in 2005 is the number one priority for 25 percent of Americans. However, LendingTree’s 2004 Smart Borrower Survey found 63 percent of those moderately to extremely concerned about their overall level of debt, do not have a financial plan to get rid of it. Procrastination does not pay the bills.
• Begin tracking your expenditures. By keeping a close eye on your purchases, you can determine which are needs versus which are wants. You can then formulate an action plan to reduce unnecessary expenditures and free up money to pay down debt.
• Set spending priorities. Make sure you spend to serve your life goals instead of just paying off expenses as they occur. Set aside money first for debt repayment and then budget for things such as saving for college or retirement, before spending on discretionary items.
• Leave your credit card at home. Surveys done by Consolidated Credit Counseling Services indicate consumers are likely to spend more using a credit card than when paying in cash. Also, closing credit card accounts can help you resist the desire to overspend by restricting your credit limit.
• Consider a debt consolidation loan. You can benefit from lower interest payments if you transfer the balances from high-interest credit cards to a lower-interest loan such as a home equity loan or home equity line of credit.
• Pay more than the minimum payment on your loans. A 2004 Cambridge Consumer Credit Index survey reveals that 42 percent of Americans are making either the minimum payment, or no payment at all, on their outstanding credit card debt. Using money sitting in a savings account (that’s most likely earning less than 2 percent interest) to pay off credit cards (that may carry an 18 percent interest rate) could be a far wiser investment.
• Try to negotiate a better deal with your lenders. If you’re feeling overwhelmed, don’t be afraid to ask your lenders if they are willing to lower their interest charges or reduce your required monthly payments to help you get back on track. This is often a better alternative for lenders than having you file for bankruptcy.