Dump that debt!
Top money experts (who are debt-free!) show you how
Track your monthly spending
Just by doing so, you’ll naturally see ways
to cut expenses and halt debt, says Mecham.
Software and online budget-tracking programs are great, but pen and paper works, too.
“Don’t get hung up on the exact tracking
method. Pick one that works for you and do
it,” he says.
Treat debt as an emergency
Don’t casually make debt payments while
you continue to go out for nice dinners and
vacations. Instead, cut out all discretionary
expenses and channel all possible income into
eliminating debt. “This mentality can cut
decades of debt down to just years or even
months,” says Mustache.
Use the “debt snowball”
Although there are many methods for
tackling debt, Ramsey advocates paying them
off by dollar amount—smallest to largest. His
advice: Laser-focus payoff efforts on that
smallest debt first. Make only minimum payments on everything else. When the first debt
is paid off, repeat this approach with your
next-smallest debt, and so on. “Your confidence will soar when you pick up those first
wins, and in the process you’ll realize that you
really can get out of debt,” he says.
Haggle over price
Negotiating recurring costs can save you
big bucks—which you can use to pay off debt.
Cellphone plans, for instance, are getting über-competitive. Ask your provider for a cheaper
plan or discount. If they don’t budge, switch to
a less costly provider that will also pay for your
early-termination fees, suggests Weston.
By Teri Cettina
WHAT WOULD IT be like to see the magic
words “no minimum due” on your credit card
statement? Drive your car knowing it’s paid in
full? Or even retire your mortgage before you
retire? Five money experts who are debt-free
themselves shared their insider tips with The
Clark Howard is a nationally syndicated
radio talk show host, Costco member and
author of numerous books on personal
finance ( clarkhoward.com).
Jesse Mecham is a former certified public
accountant, a Costco member and creator of
the money-management software program
You Need a Budget ( youneedabudget.com).
Mr. Money Mustache (mrmoneymus
tache.com) is the pen name of a popular blog-ger who lives with his family in a small
Colorado town and employs an alias because
he enjoys his privacy. He likes the fact that
“Stash [an abbreviation he uses] rhymes with
cash” and implies “stash away your cash.”
Mustache retired at age 30 after a 10-year engineering career. This Costco member used no
special tricks other than living on about 35
percent of his take-home pay and investing
the rest in conservative index funds.
Dave Ramsey ( daveramsey.com) a Costco
member who has authored five financial
books, including Complete Guide to Money
(Ramsey Press, 2012; available at Costco).
Ramsey’s radio talk show, The Dave Ramsey
Show, airs nationally. (For more on Ramsey
and his book, see story on page 125.)
Liz Weston is a nationally syndicated
personal finance columnist and author of five
best-selling finance books ( asklizweston.com).
This is what the experts had to say.
Create a safety valve
Earmark a few dollars each month for
something you enjoy—even if you’re paying
off debt, says Mecham. It can keep you from
binge-spending when you’re stressed.
Pay off debts twice as often
“Interest rates are calculated daily, so if
you send half of a required monthly payment
every 14 days—instead of just once a month—
you reduce your interest charges significantly,”
says Howard. Try this strategy for paying off
credit cards, mortgages and other loans.
Find a cash stash
Have a yard sale, or sell your
clutter on eBay. Temporarily
take an extra job and put
earnings toward debt.
“You can make $1,000
a month delivering pizzas a few
nights a week,”
“It’s like magic. You spend differently
when you withdraw cash and have to make it
last until your next payday,” says Howard.