By Gregg Hall
 If you have experienced a loss of job or an injury it is very easy to become over loaded in debt. This is something that happens to people everyday. They get hurt, get laid off, or go through a divorce and end up using credit cards to make up for the cash they don't have and end up in debt that they find hard to get out of. Using credit cards like they were cash is not a wise solution and with the high interest rates they charge you will find it difficult to get them paid back. If you have found yourself in this situation then this article will give you some help on getting out, if you aren't there yet, maybe it will prevent it from happening to you.
As I said above it is never a good idea to use credit cards to get through tough times or even as your own form of debt reduction. The high rates will just take you deeper into the abyss of debt and make it harder for you to get out. For most people that file
bankruptcy or looking for help with debt consolidation it is credit card debt that caused the problem.
If you are in a program of debt reduction, self imposed or otherwise, you need to concentrate on figuring out ways to lower your cash outflow and the amount of bills you have to pay. Credit cards will do the exact opposite; they will increase your bills and make it even harder.
Here's an example that we can look at: If a family has bills including their mortgage, insurance, car notes, and other miscellaneous expenses that adds up to over $2300 per month is there any possible way to reduce this? There are a number of ways that one could look into to accomplish this, one way is to look into a mortgage refinance that will help us refinance the home mortgage and bring the other bills into it for one low payment. One of the advantages of doing this is that the mortgage loans are typically lower interest and in many cases may be written off on taxes.
If you take the time to look around you will find loans that will give you cash back, loans that you can take out against the equity in your home, loans like the one above that will allow you to combine everything into one low payment, and many other options.
Just about any debt you owe can be rolled into one payment or at least combined and reduced but anything like utilities, cable, cell phone bills and the like will have to be paid separately. You may be surprised at how much you will be able to reduce your monthly payments with a debt consolidation loan.
Gregg Hall is an author living in Navarre Beach, Florida. Find more about credit as well as credit card debt settlement at http://www.checkingaccountalternative.com Credit Card Debt The Fastest Way to Pay Off Debt
By Kristine McKinley
 There's some debate among financial planners as to the best way to pay down debt. Some say paying the highest interest rate debt first is the best way; others say paying the smallest balance first is the best way.
Both methods have advantages and disadvantages, so we'll take a look at both, and help you decide which method is best for you.
Method #1 - Highest Interest Rate
In this method, you focus on paying off your highest interest rate debts first. The basic steps in this method include:
1. List all debts in order from the highest interest rate to the lowest interest rate.
2. Commit to paying the minimum payment on every debt.
3. Determine how much extra can be applied to the highest interest rate debt.
4. Pay the minimum amount plus the extra amount towards the debt with the highest interest rate until it is paid off.
5. When that debt is paid off, apply the amount you were paying to the debt that is paid off to the next highest interest rate debt until paid off.
6. Repeat until all debts are paid in full.
This method is the best method mathematically, as you will pay less interest in the long run.
Method #2 - Lowest Balance
In this method, your focus is on the debt with the lowest balance. Note, this method was made popular by Dave Ramsey and is often called the Debt Snowball method.
The basic steps in this method include:
1. List all debts in order from the smallest balance to the largest balance.
2. Commit to paying the minimum payment on every debt.
3. Determine how much extra can be applied to the smallest balance debt.
4. Pay the minimum amount plus the extra amount towards the debt with the smallest balance until it is paid off.
5. When that debt is paid off, apply the amount you were paying to the debt that is paid off to the next smallest balance debt until paid off.
6. Repeat until all debts are paid in full.
This method may not be the best method mathematically, as you will pay more interest in the long run. However, this method allows you to pay smaller debts off faster, which may give you the motivation you need to stick to your debt payment plan.
So, which method is best for you? It depends.
Method #1 is best for you if:
* You have debts with similar balances
* You have discipline to stick to your debt repayment plan
* You are a numbers person, and you realize the benefit of paying off the highest interest rate debt first
Method #2 may be best for you if:
* Your debts do not have similar balances - i.e., you have a $500 credit card balance, a $12,000 credit card balance, and several in between
* You need motivation - paying off the smallest credit card balance may be the motivation you need to stick to your debt repayment plan
* You don't mind paying more interest over the long run in exchange for getting rid of smaller balances first
Tip: Why not use a combination of the two methods? Using a combination of both methods allows you to feel a sense of accomplishment by paying off that first debt (the smallest balance credit card), and gives you the motivation to start working on the next debt (the debt with the highest interest rate).
Remember, the method that works best for you is the one you will actually use. The most important thing is to make a plan and stick to it so you can live debt free.
Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, offers financial and tax planning on an hourly, fee-only basis.
Did you find this article helpful? If so, then be sure to check out our new ebook, Living Debt Free!
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