Now that you've made a list of all your debts, it's time to do something about how much bad debt you have. You probably had a good time getting into debt and took your time building up that huge pile of bills. Unfortunately, getting out of debt isn't as fun. As soon as you start making a plan to beat the debt monster for good, though, you'll feel a huge weight lift off your shoulders. So let's get started!
Lesson Two: Getting rid of credit card debt
The worry about debt will soon go away. It's so close that the debt monster is groaning in despair.
Pull out your "bad" debt list from Lesson One. Now is the time to mess with credit card companies!
Please bring down the interest rate
Call your credit card companies one by one and ask them to lower your interest payments. People who have always made their payments on time in the past will be more likely to succeed at this task, but it never hurts to try, and you might be surprised at how much you can save just by asking.
Here is what you could tell your credit card company when you call:
You: I just got an offer in the mail for a credit card that says I can transfer my balances for 5% interest. Your service has been great, and I don't want to switch credit cards, but I've had this card for 4 years and I'm still paying 18 percent interest. If you don't lower my interest rate, I'll have to switch cards if I want to save money.
The credit card company will tell you that your rate is the going rate and may put you on hold while they look at your payment history. You could follow up with something like this when they're ready to talk to you again:
You: It might be a fair rate, or 18% might be the going rate, but since this other credit card is giving me 5.9%, I'll pay a lot less by moving my balance to them. I want you to lower my interest rate to at least 10%.
Most likely, the credit card company will put you on hold while the representative checks with their boss or whoever is in charge behind the scenes of credit card companies. They might say they can lower it by 12 percent or some other number that is higher than what you asked for but less than what you were paying before. Accept the new rate and throw a party, but don't spend too much or you'll have wasted your time.
Putting together your plan of attack
You can't bury the debt monster without a plan, because it's a very strong monster that steals the Terminator's famous line, "I'll be back." If you don't have a plan, the debt will definitely be back.
Rewrite the list on a new sheet of paper or in a new spreadsheet so that the highest interest accounts are at the top and the lowest interest accounts are at the bottom. In general, this is the order in which the bills should be paid. Why is it better to pay off accounts with higher interest rates first? Because less of your payment goes toward the amount you owe.
