Easy Steps

Debt can feel overwhelming, but it’s actually not that hard to conquer. Follow these easy steps to get started today and you’ll be on the road to feeling better and getting more of your money working for you.


Put it in writing


Writing it down helps you feel better since you are now taking action

The first step in gaining control and reducing the stress of debt is to get what you owe down on paper.  While it may seem painful, you will feel better as you start to take action.

Not very long!  You just need a simple record, either on paper or ideally on a spreadsheet so you can keep it updated.


Glad you asked!  Since most Americans also struggle with debt, there are some great apps, mostly free.  Ones to try include Ready for Zero, which has a free option, as well the Debt Payoff Assistant, also free.

Include the following:

  1. Each type of debt you have (each individual loan or credit card account you have)
  2. How much you owe (the outstanding balance)
  3. The interest rate you are being charged (annual percentage rate)
  4. The minimum payment due each month

Being debt free is ideal, but to start off, being free of high interest debt is most critical.  So start with your high interest debt which would include credit cards and possibly student loans.  Later you may choose to start again on car loans and other types of debt.

Now that you’ve got a tally, it’s time to have an honest conversation with yourself.  Realize that spending tomorrow today only hurts one person:  you!

There are times when debt is needed, and even good.  For example, loans for college or trade schools can be a great investment in yourself.  It will usually pay off in higher future earnings.  Or using debt to buy a home can be a great investment too.

Unfortunately most of us also use debt in a way that isn’t so productive.  That’s usually credit card debt used to buy things we want, but can’t yet afford.   By going into debt for “wants”, we essentially get tomorrow today.  The problem with that, is that we are trading today FOR tomorrow.  Because we’re going to have to pay that debt back, with interest.  The longer it takes, the more we end up paying.  That hurts our future dramatically.

Many people go into debt for their kids, not for themselves.  Maybe it’s a school trip, sports equipment, whatever.  But, we need to get real here.  If you are endangering your own financial situation to spend more than you have, how is that setting up your kids for success?  It’s not.  Kids learn from their parents.  We need to teach our kids to live within their means, that will be the way they can be financially secure and live the life they want.

If sports equipment is needed, can we get it used?  If not, that extra sport may not be in the cards but maybe a less expensive one is a better fit.  Most of us did without as kids and didn’t have everything.  That’s what made us motivated adults.  On the other hand, giving kids everything can set them up for failure.  They may not be motivated to go out and earn, and may then be disappointed when reality sets in and they cannot have everything they wanted.  It’s a tough change to make, but being real and teaching kids to live within their means is a lesson that every child should be lucky enough to learn, early on.

Here again, we need to be strategic.  How about a family picnic at the beach or a nearby park?  Or everyone going on a hike on a local trail?

As far as going out, most of our friends will likely be very appreciative of a creative option that’s less expensive.  How about a rotating plan for dinner parties at home?   These things are usually more fun since there’s not the stress of overspending.

Let’s remember, money does not equal love.  Quite the contrary, I’m sure we all know people who try to “buy their way into someone’s heart”.  That is empty.

Spending quality time is what is important.  Again, let’s stop letting the advertisers do our thinking for us and putting ourselves and our families in long term financial danger.  Let’s make the right decisions that support our financial future, so we will have the time and freedom to do what we want later in life, and to help our families.  Doing it through debt now hurts everyone.  Parents who are not saving enough for retirement will likely need to burden their kids later.

By stopping this excess spending now, we can improve our future prospects immediately.


That's all it will take to get started


Stop incurring more debt, today.


“Snowball” or “Avalanche” your way out of debt


These simple systems make it fun and motivating

Getting out of debt brings up negative feelings in all of us.  There’s no way around that.

Simple as it sounds, using one of these proven systems can help take that negative feeling away.  Instead you’ll feel confident as you move forward and see progress.

There are two common methods used.  Pick the one that appeals to you most and get started today!

The snowball method is done this way:

  1. Rank your debts by total amount owed, smallest to largest.
  2. Determine the total amount you have available for debt payments.
  3. Each month, pay just the minimum on everything other than the one in #1 spot. Then pay the remainder on #1.
  4. During the month, any other money available can be paid on #1.
  5. By focusing all of your extra money on one debt, that debt will disappear quickly.
  6. Once that first debt is paid off, move on to the next smallest one and repeat until everything is paid off.

This Snowball method works well because its naturally motivating to see debts get paid off one by one.  There is a downside, however, you may be paying off lower interest debt first.  So there is another choice: the “Avalanche”.

With the Avalanche Method, you will pay off your highest interest rate balances first, no matter the size.  This is always the best financially, as a higher interest rate costs you more, so if you have the discipline to do this, it will always be your best bet.

The avalanche method is done this way:

  1. Rank your debts by the interest rate (annual percentage rate), highest to lowest.
  2. Determine the total amount you have available for debt payments.
  3. Each month, pay just the minimum on everything other than the one in #1 spot. Then pay the remainder on #1.
  4. During the month, any other money available can be paid on #1.
  5. By focusing all of your extra money on your highest interest rate (and therefore most expensive debt), you are saving money on interest every month.
  6. Once that first debt is paid off, move on to the next highest interest rate and repeat until everything is paid off.

Yes, save time and effort by using an app.  Many also include motivating graphs and feedback.  Here’s a rundown of a few more apps that can help.  Some offer just snowball and some offer a choice of snowball and avalanche payoff methods.

Most credit cards charge an average of 15% per creditcards.com.  Of course that’s an average so the interest rate can vary from as low as 10% up to even up to 30%.

But here’s a secret:  credit card companies will try to get your business by offering low interest balance transfers..  Often these are 0% rates, but come with a one time, up-front fee equal to 3% or 5%.  They believe you will never pay it off and they will snare you with a high interest rate later.  But as long as you pay it off within the agreed-upon time frame, you will get that low interest rate.

    No—you only want the 0% or other very low interest offers.  Otherwise the percentage rate may be as high as you’re paying already.


Yes, as long as you commit to not creating any more debt.  Here’s the key to making balance transfer work for you:

  1. It’s best to use cards with no existing balance for balance transfers if possible.
  2. Once you use a card for balance transfer, put it away and don’t use it for any other purpose except balance transfers. If you do, you may get stuck paying high interest rates on the new charged portions and not be able to pay them off first.
  3. Note the month and year that the balance transfer ends, so you know when the interest rate reverts to normal.


Use 0% balance transfers offer to supercharge your debt payoff


Balance transfers can be a valuable tool if used carefully


Negotiate a lower interest rate


It’s surprisingly easy and works most of the time

To keep your business!  There’s a lot of competition out there in the credit card industry and they value you being a customer.

Don’t believe it?  A recent survey of 981 credit card holders found that 78% of those who called their credit card company and asked for an interest rate reduction were successful.

Any reduction in your interest rate, even a small one, frees up some money. As long as you use the savings to pay off more debt, you’ll get everything paid off faster.

This is money straight into your pocket.

It may feel strange, we get it.  To make it easier, here’s a script offered by creditcard.com to help you make the call.    Just follow it!

Once you’re on you way to paying off your debt, you’ll understand that any savings you can find can go to speed up this process.  So, look around.  Where can you save?  Can you switch from full cable to Hulu and Netflix?  Or can you call around and save $100 on your auto insurance this year?

  • Get a side gig like Uber and put everything you make from it toward debt payoff.
  • Apply any bonuses or raises to your debt—you won’t even notice it!
  • Sell old stuff you’re not using on Ebay or Craigslist.
  • Make sure you’re not getting a tax refund. If you are, you are effectively making an interest free loan to the government.  Instead, keep it in your pocket.  Adjust your withholding higher so less is taken out of your check. Then put that amount toward your debt.


Find more money to speed up your debt payoff


Even small amounts will increase your momentum

“You must gain control over your money or the lack of it will forever control you.”
– Dave Ramsey


There’s a lot of myths and misinformation out there about credit. Here are tips about credit scores and using credit wisely.

In today’s world, it’s vital to know your “credit score” . This is a three digit number that lenders assign to you to indicate your credit risk.  That simply means how likely they think you are to pay back what you’ve borrowed.

Why does this matter?  If you have a good credit score, you’ll pay less interest on credit cards and mortgages and have more access to credit.  If you have bad credit, anytime you borrow you potentially may have to pay high rates.

Given the reality of identity theft, its vital that we do monitor our credit.  We also want to know our credit score to make sure its  as high as possible if we need to borrow.  You’re entitled by law to one free report per year from each bureau.  You can request your free reports at AnnualCreditReport.com.

This free report does not include your credit score, but there’s other ways to get it:

  • Many credit card companies now provide your credit score in your online profile, for no charge.
  • Discover Card will provide anyone with a free credit score, whether you’re a card member or not. See Creditscorecard.com.
  • Creditkarma is a site that will give you a free estimate of your credit score.

If you find errors in your credit report, you want to report it asap.  To do that, file a dispute with the credit bureau.  While it may take some time, it is important since it may impact your credit.  Things to watch out for:  accounts that you paid in full that still show a balance due.  Or, in light of the recent Wells Fargo incident, accounts that you don’t recognize.

Sometimes you will see errors such as misspellings of your name or address, but these don’t impact your score, so you don’t need to worry about those.

You can learn how to send a dispute letter here.

Ideally, pay your entire balance in full each month.  But if not, it’s vital that you pay at least the minimum every month.  A missed or late payment can dramatically lower your credit score, which also may lead to that credit card lender increasing your interest rate.  And then, other credit card lenders may increase your interest rates.

The moral of the story is, always make your payment on time!

If for some reason you can’t make a payment, call the lender and explain.  Most lenders will work with you in case of emergencies and may let you make a lower payment, or provide a special payment plan.

The biggest part of your credit score is your “credit utilization”.  That means how much of your total available credit you are using.  The lower, the better, so your first strategy for improving your credit score is to pay down your balances.  From a credit score perspective, if you must carry balances, aim to keep your balance below 30% of your limit on each card.

Once you have history with a credit card company, you can also ask to have your credit limits raised, which will lower your utilization.

A credit score is important to help keep your costs of debt down, but otherwise it doesn’t do much for you.

Instead, focus on paying down debt and living within your means going forward, to get your money working for you as much as possible.  That’s a goal that will give you financial security and peace of mind.

Having a high credit score, on the other hand, won’t do much in terms of helping you achieve the kind of life you want.

A credit score is not a measure of your financial health.

A credit score does not measure what matters.  It simply measures how likely lenders believe you are to repay what you’ve borrowed.

It does not take into account your assets or liabilities, so it tells you nothing about your financial situation.  It’s far more important to focus on your Net Worth  to get a picture of your financial health.

In fact, sometimes the most financially healthy people with large savings and no debt have a low credit score, simply because they don’t borrow.

When you sign up for a credit card, you’ll get a credit “limit”.  That’s the maximum you can charge.  Some people think that the lenders are so smart they know how much credit you can handle and pay off!  Not true.

Our credit limits have nothing to do with what we can afford and instead have more to do with how much the lending company hopes you’ll end up with in their debt.  We should never utilize our full credit limits.

Remember, we want our money working for us.  When we’re in debt, our money is working for everyone else!  It’s always best to minimize use of debt and credit when possible.

Why not?  When you apply for any new loan or credit card, an inquiry is recorded on your credit.  This inquiry automatically lowers your score.

It may just be a little, but if you do this repeatedly, these add up and stay on your record for two years.  So only apply for credit that you really need and are likely to be approved for.

All information provided on myfwcenter.com is general in nature and not tailored to you. It should not be considered individualized advice.

Financial education and website provided by Wavelength Financial Content Inc.