Borrow Money to Get Out of Debt
We'll show you how it works.
Does it sound a bit peculiar to borrow more to get out of debt? If you handle it the right way, it really works.
First Step - The Set Up
On a blank sheet of paper, mark four columns. In the first column, list each creditor you owe. In the second, list the amount you owe each creditor. In the third, list the interest rate for each. In the fourth, list each minimum payment. Arrange your list showing the creditor with the highest interest rate first and so on down the list. While you may think the largest balance should be paid off first, you should really focus on the highest interest rate you're paying.
Second Step - The Pay Down
Each month make the minimum payment to each creditor, and use the remaining cash to pay on the debt with the highest interest rate. Get rid of this debt first.
Third Step - The Pay Out
To speed up the process, you might consider borrowing. If you do, borrow under two restrictions. First, the total amount you borrow must not be greater than the total you already owe. Second, the interest rate must be lower than the rates you currently pay. This strategy will reduce the number of separate payments you must make, reduce the speed of the growth of your balance and relieve financial pressure.
Last Step - The Pay Off
An important key to this whole exercise is not to take on new debt above what you already owe. The ultimate goal is to eliminate your debt and change your spending habits so you do not continue creating new debt. This will require discipline. But we know you can do it.