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As a personal finance site, The Motley Fool is hit-or-miss. It’s mostly an investment site targeting average folks, though sometimes its articles miss this target. Still, it’s a valuable site. One useful feature is this How to Get Out of Debt on-line seminar. The seminar includes a PDF workbook and several pages of information. Here’s a summary of the lessons:
Lesson One: Setting the Foundation
- Debt is simple to understand, but difficult to master. It takes self-discipline to overcome debt.
- There are two paths to debt: short-term recklessness, or long-term poor choices.
- Compound interest is a powerful force that can work for you or against you.
- There are good debts and bad debts. A good debt combines low, tax-adjusted interest with a potential to gain something that increases in value.
Lesson Two: Eliminating Credit Card Debt
- Unpaid credit card balances are the worst kind of debt. Stop using your cards and pay off the balances.
- Carry only one or two credit cards, and pay these in full every month.
- A budget is like a map to help focus your self-discipline.
- Short-term saving goals enforce self-discipline.
Lesson Four: Avoiding Setbacks
- Don’t attack debt so aggressively that you risk trading good debt for bad.
- Planning for emergencies is a key element to any debt-management strategy.
- Don’t let debt get you down. Relax. Take it one step at a time. Things will work out.
- It’s in everyone’s best interest (including your creditors) for you to get out of crisis and into a repayment plan.
- Know your rights.
- A good credit counseling service can turn your life around, be be careful
There’s some good information here, but it seems poorly organized. Why is the
triage section last? And there needs to be more information about why some of these steps are necessary.
The Motely Fool How to Get Out of Debt seminar is fine as a starting point, but I believe that anyone really looking to change their life is going to want more. Go to your public library and borrow The Total Money Makeover or Your Money or Your Life, two excellent books about transforming your relationship with money. Either will help you develop a plan to get out of debt and will serve as a constant reference as you work toward debt elimination.
September 12th, 2006 at 6:26 am
[...] Get Out of Debt [...]
October 13th, 2006 at 8:57 pm
Great info, It is so important to learn personal finances, although sad to say it is left up to us to learn it as a life skill, and not one that should be taught in junior high.
November 26th, 2007 at 5:10 am
For taking it one day at a time - I use online bill pay and every time I do NOT get a Starbucks coffee, go to the bar, go to the mall - I take what I would have spent and put it towards my credit card debt. For example when my coworkers go to Starbucks and I stay behind I go online to my bank and pay $4 to my credit card debt. Yes, only $4 but when I get my monthly statements I will have ten of these small payments in addition to the minimum payment and it feels great to see the balance going down. I don’t always deny myself luxuries or impulse buys but when I do, I immediately go online and put the money towards debt.
Three months later my $1,000 debt is down to $200 and I plan to pay it off completely before New Years Eve. This is a very small thing but it helped me and I thought you might like to read it.