Get Out of Debt? You Bet!

My husband and I had a long distance, and very expensive, courtship. When we met 17 years ago he was a Marine stationed in Kuwait. I was living and working in Germany. It didn't take long in those pre-email days for the costs of our phone bills and visits to exceed our incomes. But we didn't care - we were in love. The following year we had a lavish wedding and honeymoon, which we mostly paid for ourselves - after all, we'd both been grown and out of the house for over a decade. The next thing we knew, we were newlyweds with over $20,000 in credit card debt.

Over the next eight years we tried everything (or so we thought) to get ahead financially. We transferred our balances to credit cards with lower interest rates. We took out a Home Equity Loan. We tried living on one salary, and sending all of our second income to the credit card companies. But we never tried the one thing that really works. Are you ready for the answer?

We never stopped charging.

We all carry around credit cards with us because they provide us with a sense of security. It's nice to know that they are in your wallet in case of emergencies. But be honest - have you ever really used your credit card for an emergency? Since I have paid my credit card debt in full, I have learned that there is no greater sense of security than not owing anyone money.

My credit cards now reside in a fireproof lock box, not in my wallet. I have them in case I need to charge the occasional airline ticket or rental car. That prevents my debt from accumulating. But once you have stopped digging that hole for yourself, how you get out of it?

I learned about an ingenious plan from financial guru Mary Hunt in her book "Debt Proof Living". It's called the Rapid Debt Repayment Plan and it works like this:

1) List all of the debts that you owe, and how many months that it will take you to pay them off if you make the minimum payment

2) Organize your list so that the debt with the shortest payment period comes first and the longest comes last

3) Total up the minimum monthly payments. You are currently spending at least this much. This total is your Magic Number that will never change. Your creditors will lower your monthly payments as time goes by, but Don't Change That Number!

4) When you have paid off the debt with the shortest payoff time, add the amount you were sending that creditor to the next one on your list. The beauty of this plan is that you keep sending off the same amount each month, but your debts will disappear faster and faster!

5) When you have paid the last debt in full, continue to send that same amount of money to a savings account. Now you can save up for things and pay cash!

OK, this bears repeating - this plan will only work if you stop charging!