Listen to 5 Simple Steps To Get Out of Credit Card Debt
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Who is in charge? You or your credit card? Joe Paretta, the money coach, shares the secret to overcoming credit card debt, no matter how overwhelming.
- The one key thing you must have to get rid of credit card debt
- What God has to do with it
- One easy to begin habit that can cut your expenses by 20% or more
- Why you shouldn’t pay off the card with the highest interest rate first
- Just fifteen minutes for the first two steps
Find out more below
These articles are written by Margaret Agard author of the In His Foot Steps memoirs:
Overwhelmed with more to do than time to do it in, Margaret began giving her daily to-do list to God. That’s when her new life began.
“”I liked the spunk and matter of fact way the author describes her daily walk with God. I liked the bits and pieces of wisdom throughout. It was a breath of fresh air from what I’m used to reading. It has little to do with productivity and everything to do with being led by the Spirit and serving others by asking God what to do every day.“
Justine
GoodreadsJoe Parettas Book
I concur that paying off debt is 100% liberating. Equally impressive is being able to use a credit card without racking up interest charges each month. It has the same disciplinary effect as the cash method except safe and convenient.
One thing that was not addressed is credit card debt that occurred as a result of job loss or other unforeseen circumstances. Amassing credit card debt as a result of the unforeseen is very different from credit card debt based on spending habits: shopping, travel, and other pleasures. To advise listeners not to save until debt is paid is to reinforce the lack mindset. If establishing a savings plan is a low priority as advised, due to no real ROI, then people will not focus on putting money aside to cover that unexpected car repair that is not covered by insurance or is not within warranty, for example. When strapped for cash or in an emergency, people naturally reach for a credit card. With no savings plan, the only other tangible pay back solution is monthly and interest-bearing.
A financial guru once advised me to pay off bills, even the lower debts, except AFTER paying the tithe and saving a tithe through an automatic program. This “prioritizing from the top” method, as I call it, can be equally motivating to some as interest/expense tracking. At the very least, it makes sowing and faith-building a priority over fear of lack and the lender.
Something else that was not mentioned was transferring high balances or high interest cards to a credit union, local bank or low interest card (beyond the 6-14 month 0% interest incentives). Actually, major creditors are not all that generous about lowering interest rates esp. given credit card regulations, the economic climate in Europe, and amidst billions in loss through reckless investing. My interest was raised despite a stellar score and impeccable lending history with a particular card creditor. I’ve asked four times for a lower rate and was told that I have the lowest rate available–this after a quarter percent decrease in my card’s interest rate, which more doubled during the economic demise to begin with. As a result, I work to avoid incurring interest on that card all while garnering essential travel perks, cash rebates, and “free” purchase protection.
Although believers should not be fearful or complacent, we are fearful and complacent in various areas of our lives. Periodically, we all need to be motivated, inspired, and encouraged. Joe/Margaret, is there was a way to make getting out of debt within six months or more attainable for someone? Do you think that providing someone a taste of freedom from at least one card balance will motivate them to pay off their car, mortgage, student loan, and other debts, plus save AND sow more? What if individuals, financial organizations, etc. offered a $500-$2,000 debt incentive to the person who pays off or comes close to paying off their lowest debt by a set date? Monies can go toward the debt if not paid in full by the set day or the next lowest debt.
Thoughts?
Dear Isha,
Thanks so much for your comments and for listening to the show. You make some excellent points here. Do to time restrictions, we could not go further into these ideas, so let me address them here.
Yes, the tithe should come first. Matthew 6 addresses seeking God first and that also means giving first, especially to the place where you are spiritually nourished. Sowing should be a priority and the more it is done, the greater one’s faith in God becomes. We CANNOT outgive God.
Secondly, a transfer to another card with a lower rate will certainly facilitate the process of debt repayment, if, of course, use of that and other cards is reduced or even eliminated. Also, you make a good point regarding the “teaser” rate. Frequently, the rate on the balance transfer card is for a limited time. Be sure that most (or all) of the outstanding balance is paid by the end of that time frame.
Next, yes, emergencies happen frequently and in our present economy, job loss/reduction of hours is all too frequent. Everyone (single individual, couples with or without children, etc.) needs to have an emergency fund, somewhere between three to six months of expense for these situations. I tend to distinguish the emergency fund from other savings vehicles because the emergency fund should be totally liquid and readily available. Thus, the interest rate does not matter here. You just want to park this money in an account that you can get to right away. If it is used, in part or in its entirety, replace it as soon as possible.
Lastly, with regards to your final point/paragraph, as I said in the interview with Margaret, “money is as much psychological as it is material.” Once someone pays off a credit card, the chances that he/she will pay off other cards and debts (student loans, cars, etc.) are greatly enhanced. The BELIEF that it is POSSIBLE is strong! How long will it take to get out of credit card and/or all debts? There’s no one answer to that question. You refer to six months. Some can do it; others will require more time. The KEY, however, is to get the process started, stick with it, and pay attention to your spending habits. I like the incentive “programs” that you suggested. They should be explored.
Lastly, I’m sorry to hear that you could not negotiate lower interest rates on your cards. More often than not, the banks and credit card companies are willing to work with customers (for fear of losing them to balance transfers, etc.)
Thanks again for your comments! I hope that you continue to listen to “In His Footsteps.”
Best,
Joe