Pay off $49,000 in [tag]credit card debt [/tag]in 5 years.

Have you seen commercials and internet advertisements offering to eliminate your debt in just a couple short years? No matter how much debt you have? Does it seem to good to be true? So what is the deal? Well there are two methods that can achieve this type of radical debt pay off.

The First method is debt settlement:

[tag]DEBT SETTLEMENT[/tag] or [tag]DEBT NEGOTIATION[/tag]:
“You make an offer to your lender to pay off 30% to 50% the current balance you owe. This is pre-collection agency. This process can take 6 months or more and it’s not for the weak of heart.”

This method can work to get you out of debt but it will trash your credit. It’s a trade off and some see it as an alternate to Bankruptcy.

The Second Method:

[tag]DEBT SNOWBALL[/tag] or [tag]DEBT ROLL-UP[/tag]:
“The overview for this program is you pay more a month than your monthly minimum on one debt while you stay current on all your other debts. You start applying the extra money every month to the smallest balance, and once that balance is paid off you apply all the money from that debt to the next largest balance. This will create a snowball effect in paying off your debt.”

This method is championed by the likes of [tag]Dave Ramsey[/tag] and [tag]John Cummata[/tag].

If you would like to read a real life story about people who got really motivated and paid off large amounts of debt in a short period? Check out this article and get a bit of motivation.

Sometimes when the debt is so large and you are looking at 2 to 3 yeas before you [tag]pay off the debt[/tag] you feel like giving up. But a word of advice, it really does get easier. As you start to pay off more and more debt and sell results you create momentum which push you a long to continue on your journey to be debt free.

I have always compared getting out of debt to getting in shape. It’s hard but not impossible. It takes a plan (budget), discipline (tracking your progress) and motivation. I have found motivation is key to my success. Take notice of your small wins. Because every win is just that, a win!

Even if you are $80,000 in [tag]debt[/tag] and have paid off $2,000 in the last year, that is great. You have taken action and need to stay motivated to succeed. Believe me that is better than doing nothing. And as you pay more off you will free up more cash to apply to debt and your debt reduction will start to rapidly increase. Thus the name [tag]debt snowball[/tag].

Slow to start but once it picks up speed it really gets moving. I believe in you guys so keep up the hard work and keep crushing that debt.

See Dave Ramsey at work her, well not really it’s Steve Bucci over at bank rate.com. His three steps are:

1. Get a plan – start a budget

2. Build an Emergency Fund of 6 months

3. Aggressively pay down debt.

Business failures, credit car debt and, yes, even too much fun can tip the scales of your daily lives, but you can get out of debt with three steps and some hard work.

In debt? Get out in 3 hard steps

technorati tags:Dave Ramsey, debt, Steve Bucci

I wrote about this last month, you can find the post here, but I found this really good article which gives instructions on how to do this… Check the bottom of the article for links to a site that will help you figure out how many allowances you need based on last years income.

You can give yourself a bigger paycheck by not over-paying your taxes. Here’s how to adjust your withholding to get an effective pay raise.

Give yourself a raise – MSN Money

technorati tags:bigger paycheck

I found this article over at mynewchoice.com and I have to say it is right on the money. I personally have used my tax returns to buy “stuff” and never thought of using the money as a debt reduction tool. A very powerful one as pointed out in this blog.

This all changed about 2 years ago when the debt was too much and I need a way to really jump start my debt reduction. The first year I used most of the taxes to pay debt and i adjusted my W-4 so less would be with held. The next year I got less back at the end of the year and had more to pay off debt through out the year.

I still get money back at the end of the year so I need to adjust my W-4 again this year.

For anyone looking to really start to create a debt reduction “snowball” tax time is a great way to kick it off.

With the average American household carrying about $8000 in credit card debt, the average tax refund of approximately $2500 could eliminate over 30% of that household credit card debt. Unfortunately, many people view a large tax refund as a windfall and rarely spend it wisely.

Would You Like an Extra $200 Per Month? » My New Choice

technorati tags:debt reduction “snowball, debt

One of the worest things about being in debt trouble is being afraid to answer the phone or open your mail. This list of 50 found on bankrate.com is inspiring if you want to get out of debt. For some reason 23-26 struck a chord with me. How about you?

23. Not screening for credit collection calls or letters.
24. Looking forward to opening your mail.
25. Never having to meet Judge Judy.
26. Reading a statement that reads “paid in full.”

50 good things about being debt-free

technorati tags:being debt-free

I found this great online stream on NPR about how to get out of debt. Some really important info is in this 30 minute online radio show. I know it’s hard to find 30 mintues in the day just to listen to a radio show but it’s worth it.

Here is a direct link to the radio show

Financial analysts and a collections expert discuss the process of debt collection and why some consumers who don’t know their rights end up more in debt than when they started.Guests:Walter Robinson, editor of The Boston Globe series called “Debtors’ Hell”; assistant managing editor of the GlobePeter Duffey, owns Double Helix Inc., a private investigation firm, which provides debt collection support servicesLiz Pulliam Weston, writes a twice-weekly column for MSN Money; author of the books Your Credit Score and Deal With Your Debt

NPR : In Debt, with No Easy Way Out

technorati tags:debt

This is a great article. It covers different people’s escape from debt. I don’t agree with all the methods used but the bottom line is these people took action to get out of debt and because of it they are living much happier lives, and wealthy… take a look for yourself.

Inga Shivers was working holidays and overtime and lying sleepless at night, juggling the bills in her mind — $55,000 worth — for her nine maxed-out credit-cards. The pharmacist’s exhaustion must have showed, because a kindly colleague who knew of her trouble pulled her aside and told her how he had needed help to dig out from a giant pile of medical bills.In that moment, Shivers, then 34, made her decision. She found a credit counselor, cut up all but one of the credit cards and got on a payment plan. Three and a half years later, she paid off the last of the bills.

Escape stories from debt hell – MSN Money

technorati tags:credit cards, debt relief, debt, dave ramsey

Debt is out of control but as MP Dunleavey there is a root cause. I agree with what she is saying. I also like to make the analogy of someone who has over the years become very over weight. Once you have gained the weight you need to keep eating the way you are and do little to no exercise to keep the weight on.

The hardest part of loosing weight is changing your eating habits and getting into a work out routine. It take discipline and motivation to start to make the change and finally reach your weight loss goals. I believe this is the exact reason why we get into debt and why it’s so hard for us to get out.

The good news is with discipline and motivation debt can be crushed. It will take time and serious root causes will have to be addressed. Check out MP Dunleavy’s take on debt:

Even though people pay lip service to the gospel that debt is bad, millions of Americans are still borrowing beyond their means, spending like the bills will never come — and saving less and less of their personal disposable income.

I’ve attributed this debt dependency to living in a ridiculous
consumer culture, to humankind’s innate greed, to a Darwinian need to
keep up with Mr. and Ms. Crate&Barrel, to elevated blood levels of
financial denial.

It only occurred to me recently that maybe, deep down, people not only like living on borrowed money, they’ve grown so accustomed to its seductive presence that they can’t imagine a life without owing.

Don’t get too comfy with your debt – MSN Money

technorati tags:debt relief, debt, credit cards