3 things I would NOT do in getting rid of credit card debt?

I just talked about how damaging that debt can be to your life in my article: The most important step to get rid of debt. Now let’s say that you acknowledge debt is not good for your life goal of financial freedom, you might start researching on how to get rid of it or at least reduce your debt.

I recommended to apply “Avalanche” approach to pay off your debt in the order of interest rates from high to low. The logic is simple. Higher interest rate carries higher interest expense and you want to stop that immediately. If you are already in this process, I would like to personally congratulate you for your progress as I know it takes strength to address debt and decide to really manage it. You will feel empowered and gaining back control of your life and options. It is a journey that we will all be here to celebrate with you for your achievements along the way.

When you decide to acknowledge your debt and determined to pay it off, you might first want to get some advice about how to do it. The recommendations are overwhelming if you google that online. Many of approaches could be provided in the purpose of making you spend more money to reduce your debt. So here I want to talk about things I would NOT do in getting rid of debt, especially credit card debt:

  1. I would not use “snowball” approach.

    Snowball approach is to get rid of small credit card debt first and move onto the next higher amount. It was recommended by some people because it is believed to make you feel better and accomplished step by step. Let’s make this very loud and clear. Debt, regardless big or small, is dangerous and our goal is to eliminate it all. To pay off lower interest rate debt simply just because it is smaller amount does not make sense as you are spending money on interest rates that you can avoid should you choose to pay off high interest rate debt first. So let’s get over with the illusion and get into the real steps.

  2. I would not take out house equity to pay off high interest rate credit card debt.

    This is a very common approach in the belief that we are lowering our interest rates to save money before paying back to house equity. If we made a goal to GET RID OF debt, the goal is to get rid of it, instead of turn it into longer tasks by switching to another form and fashion. Our goal is to make interest rate go away, not lower. There is no financial services that don’t cost you. When you apply equity loan, you will pay the expense because the bank needs to process the paperwork for you and run the credit to check on your eligibility etc. By the time you think you are getting a great deal, it is a deal at much higher cost than you think.

    Another drawback to this approach is that, now you have a lower interest rate debt, you will tend to think it is ok to hold on it for a period of time. Who does not have mortgage, you are thinking! This is the exact reason people die with debt in their name. If you want to liberate yourself from debt, make the hard decision and implement it. It is worthy because a debt free future holds so much more in life to you.

  3. I absolutely would not use financial services to help.

    Bottom line is that you don’t need to spend $2000 to get rid of your credit card debt simply because you can do it. Hiring someone who is doing the work you can do is a waste and adds more burden in the process. List all the debt in details, item by item. Track each debt interest rates being charged. Rank them by interest rates from high to low. Look at your spend and income. Tweak the spend and think through other ways of getting more incomes. You can cut down your entertainments, happy hour spends, clothing etc. In another words, cut down the spend that you don’t actually need, rather just you want. You want to keep the spend for food, gas and education etc. Look for ways to generate more income even if it is short term driven until you pay off debts. Use apps to get paid for delivery like Amazon or be a driver for Uber or Lyft temporarily. There are many ways you can look around to speed up your debt repayments. You just have to do it.

There is no rocket science in this work. Simply you need to work on it and address the debt by changing your habit and style. You can put on a vision board to motivate you and record your milestone. We will be here for your great news. You can drop me a note in the comments if you need a group support.

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Simple Wealth For Women is a blogging website focusing on financial discussions. I help women to crush debt, learn how to invest and make more money. I show you simple approach and provide you with specific ideas to help you get to financial freedom and build an amazing life.