Debt Free, 7 Day Plan

If winning the lottery is your plan for getting out of debt, you may want to rethink that strategy. If your plan for becoming debt free is by making minimum payments, the idea is right up there with the strategy of winning the lottery. As hard as this may sound you played a proactive role in getting in debt, you have to take one to get out of debt. Getting out of debt is not hard, it’s challenging but what is not? Anyway, you are not the only one who has been in debt, there have been people before you and there will be people after you. I have been there. If we worked hard at getting out of debt, why can’t you?

Here is my 7 day plan for getting out of debt. The assumption that has been made is that you have stopped charging to your credit cards.

Day 1.  Gather all your bills/Pull your credit card report: It surprises me sometimes how people refuse to open their bills. Bills do not disappear just because you do not want to deal with it, interest rates do not stop and remember ignorance is not cheap. If you fall in the category of those who refuse to open the bill, do yourself a favor, open them. See how much you actually owe. You do not want a situation in which you think you are out of debt and then a bill pops up. Pull your credit report. Your credit report has a list of all the credit cards and each balance. If you have not obtained a free copy of your credit report, you can obtain a free copy from annualcreditreport.com. Once you have gathered your bills and pulled your credit report make a list of all the bills you owe. A list is important because sometimes it makes a seemingly huge pile look small, also it is for organization. On your list identify:

• Amount owed/Balance
• Company (credit card) name
• Contact information
• Interest rate
• Method of interest calculation
• Grace period
• Minimum Payment
• How much you can possibly pay

Day 2.  Call/Write each company: Tell them you are working on paying your bills off and you would appreciate any help that can give. Ask if they can lower your interest rate and/or extend to you a 0 % APR for a certain number of months. Negotiate any other fee like an annual fee if you have one, late fees and even some of the interest accumulated. Also see if payments can be deferred without charges. If all companies refuse keep calling till you strike gold. Of the million NOs you will get a YES, it is simple probability. Look for cards that have 0 % APR introductory and allows for balance transfer.

Send a certified letter to the credit card companies also, stating your request. If you are ever taken to court, what better proof than a letter emphasizing the fact that you are taking a proactive role in trying to get out of debt.

Day 3.  Find Money: Look around your home. There are plenty things you have that you can sell to pay down your balance – clothes, shoes, jewelry or that flat screen TV you are financing.

Day 4.  Organize yourself/Budget: Take a good look at yourself. Are there things you can do without for a period of time, like eating out, getting your hair done, buying snacks and others. Put yourself on a strict budget but not too strict that you are not able to follow.

Day 5.  Decide your payments: Once you have negotiated your low interest rates and/or new balance, add it to your list. From your budget, determine how much you can pay monthly. From the balance, interest rate and method of interest calculation, determine which card will cost you the most. Pay the minimum payment on each card and the excess should go to paying off the card which will cost you the most.

Day 6.  Prepare yourself: Review your plan of action, meditate or do whatever you need to do to prepare yourself.

Day 7. Put your plan into motion. What are your waiting for? It's over, you have reached the end, go, get started.

For a list of books that you will find helpful, click here debt free