How to Get Out of Debt Fast

Follow this foolproof advice and you'll be back on solid ground before you know it!

By Jean Chatzky

Special Offers

You know the feeling: The bills are piling up, but you're so far behind, you can't bear to open them. When you do, you realize there's only enough in your account to make the minimum payments.

You've got plenty of company. The average American family is now carrying between $8,000 and $9,000 in credit card debt alone. We owe more on our homes, cars, and educations than any previous generation has. But there's a lot you can do to improve your own debt picture. In fact, with the following plan, you can get rid of your debt — or, at the very least, a significant chunk of it — in just a few months. Let's get started.

1. Take stock.
Sit down at the computer or with a pencil and paper and make a list of whom you owe money to, how much you owe, and what rate of interest you're paying on each of those debts. The main culprits will be your credit cards. The cards with the highest interest rates are costing you the most, so you need to work on those first.

2. Get a better credit card deal.
Pick up the phone, call the toll-free number on the back of each card, and ask the customer service representative if there's anything he or she can do to lower your current rate. More than half the time, you'll achieve success with this simple phone call, according to one study.

Then try to consolidate your debt onto a single card with an interest rate lower than what your current cards are charging you. You'll lower your monthly payments and pay off cards quicker.

3. Check your credit score.
This number represents how reliable you are when it comes to paying back money you've borrowed. A high score will help you qualify for one of those low-interest credit cards. (Your score may also affect how much you'll pay for auto and homeowners' insurance; it may be a factor in whether you can rent an apartment or whether you can get a job.)

You can find out what your score is from for $14.95. Somewhat like SAT scores, the number will range from 300 to 800 points. Anything over 660 is good, and a score over 720 is great. If it's below 660, you'll need to spend a few months improving it before you can get a better interest rate (see How to Improve Your Credit Score).

This Is A Developing Story

Latest Stories


Special Offers