RULES OF THE CREDIT CARD (while paying down debt)

It’s time to get serious.

If you’re going to invest a serious effort into finally taking control of your finances and getting rid of debt forever, you need to buckle down and follow some new rules. They may take some getting used to, but stick it out — you WILL begin to see results almost immediately, even if your actual Debt-Free Date is months or years away.

1) NEVER — EVER, EVER — FOR ANY REASON GET A CASH ADVANCE ON YOUR CREDIT CARD. EVER. Just don’t do this. The interest rate is phenomenally high. This is not “easy money” — this is the fast-track to getting into even more trouble.

2) While you’re paying off credit card debt, STOP USING THE CREDIT CARD. It sounds like a no brainer, but people do it all the time. This is exactly what got you into this mess in the first place — living beyond your means. If you MUST use the credit card to pay bills because you don’t have the funds available to pay for the service when the bill is due, then you need to go back to the drawing board and either lower the rate of service (or get rid of it altogether), or earn more money to pay for it. Preferably both.

3) If you find a competitive offer from another credit card company (or through your bank) for a low-to-NO-interest intro period, try to get your debts moved to one card, amalgamating balances if you have more than one credit card. CANCEL the card(s) you moved the balance owing from. Then THROW AS MUCH MONEY AS POSSIBLE at the new balance as you can. Challenge yourself to pay that balance off before the introductory period is over.

4) If you cannot refinance or amalgamate balances, choose ONE card, (usually the card with either the lowest balance owing, or the highest interest rate applied — sometimes that’s the same card) and apply the “snowball” method of repayment: for that one card, throw all your extra money at the balance. Earn more money specifically for the purpose of paying that one card balance off. For the other card, double the minimum payment each pay period plus pay the monthly interest fee applied. Once the first card balance is paid off (and the account CLOSED), add that same amount of money to the amount that you are throwing at the remaining card’s balance — or the next card if you started out with more than two. As those balances get paid down, the “snowball” effect causes the remaining balances to be paid down that much faster — provided you continue to pay the same amount to your full debt balance each and every month, and DON’T ADD TO THE BALANCES BY USING THE CARDS.

5) Once you are officially out of debt, you should be the holder of ONE credit card — preferably one with a loyalty program, and/or no annual fees. The new rule is that you cannot carry a balance on this card. If you use it, the balance must be paid off completely on or before the billing date each month.

This is where the fun can start! Embark on a new way of living that virtually guarantees that you will never be in debt again. It’s called “Pre-Paid Living”, and it’s automated. You can finally be free of financial worry — I’ll show you how.

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