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Let Your Personality Help You Get Out of Debt

by Gerri Detweiler, Marc Eisenson, and Nancy Castleman

Have you tried to get out of debt, but find you just can't seem to stick with it for any length of time? Maybe you're going about it the wrong way, against the grain. Try to swim with the current, by implementing a debt reduction strategy that matches your personality.

While it may not make the process totally pain-free, using tactics designed to match your profile gives you a leg up, and makes it more likely that you'll stick with a payoff program that will get you out of debt, once and for all.

We developed the following personality profiles for our book, Slash Your Debt: Save Money and Secure Your Future.


You're committed to getting out of debt as quickly as possible and at the absolute lowest cost.

Pay down your highest interest debt first, with as much as you can possibly "penny pinch" from your budget. Pay the minimums on all your other debts until the one that charges the highest interest rate is paid off. Then tackle the one with the next highest rate, and so on, until your slate is wiped clean.


You'd rather not have to think about your debts. Like Scarlett, you'd rather think about it tomorrow.

In fact, you'd rather get a root canal than create a financial plan. (A survey by the International Association for Financial Planning discovered that there are plenty of you out there!)

We hate to break the news, but there's no way you can avoid dealing with your debts altogether. (Your desire to avoid them is probably why you're having to deal with them in such a painful way now!)

You'll probably do best by getting a consolidation loan, and then having your payments automatically deducted from your bank account. You won't have to think about the bill ... and it'll be more difficult to "evade" your goal of getting out of debt. To save the most, tell the bank to deduct a set amount, say $100, and you'll be following what we call the Monthly Flat Rate Payoff Plan, and putting credit card math to work for you instead of against you.

Here's how it works: Every month, the required amount on a credit card bill gets smaller and smaller (assuming you don't charge anything else on the card). For example, if you have a $5,000 balance on a card that requires a 2% minimum payment, you'd be expected to send in no less than $100 (2% of $5,000) this month. Next month, you'd have to send in $99.42, and so on.

Instead, every month, have the bank electronically transfer a set amount, at least this month's required minimum ($100 in this $5,000 example). Since you could afford the $100 this month, it should be no burden to have it electronically transferred every month. Your flat monthly payment will automatically include increasingly large pre-payments as the months go by.

You'll save $7,545, and your debt will be paid off in 7 years and 4 months, rather than 40 years and 2 months.


You need to see results quickly to stay motivated.

You may do best by focusing on one debt at a time -- with the understanding that the faster you can pay it off, the better.

But which one? Tackle the loan with the lowest balance first. Pay the minimum on every other bill, but muster every resource you can toward paying your target debt until the balance is zero. Then throw yourself a party (make it potluck) and move on to debt #2.

True, you won't save as much money as you would by paying off your highest interest card, but if you ended up feeling discouraged and deprived, you'd be more likely to let your get out of debt plan slide, and start again with the "Charge it!"


You balance your checkbook every month, and even your kitchen junk drawer looks neat. (How I envy you!)

You may be a candidate for our most challenging and lowest-cost method for paying back your credit card debts: The Bi-Weekly Payoff Plan! Warning: This system will save you the most, but you must follow these instructions exactly, or you'll end up with late fees and a blemish on your credit report.

While most mortgage lenders only credit payments once a month, credit card companies MUST credit payments when they're received. So a half payment every two weeks will result in 26 half payments a year, which is the equivalent of 13 monthly payments, not 12. The extra month's worth of payments will all go toward paying off your outstanding balance.

To save the most, pick the credit card bill that carries the highest interest rate, and for heaven's sake, stop charging on that card! Say you owe $5,000 on it, the interest rate is 17%, and the card issuer requires a 2% minimum. That means you have to send in $100 this month. Get it in by the due date, and start pinching your pennies.

Believe it or not, if you get in $50 -- half of that $100 -- every two weeks, from then on, you'll cut your interest bill by a whopping $8,149. And you'll be debt free in 6 years and 14 weeks (not 40 years).

No Matter What Your Personality Type:

However you decide to pay off your debts, send in even more, as often as you can. The more you pre-pay, and the sooner you do it, the more you'll save, and the freer you'll be.

The Pocket Change Investor
The Secrets to Getting Ahead -- Even If You Have a Pile of Credit Card Bills, Hefty Mortgage Payments,
Loans Out on a Clunker or Two, & a Bad Case of the "I'm Tired of Living Payday to Payday" Blues.

As of Issue #35 (Fall, 2003), The Pocket Change Investor, our quarterly newsletter on how to save money, get out of debt, and live better on less, will be available online, only -- for free! To get future issues right into your inbox, send your email address to us at newsletter@goodadvicepress.com, putting the word "subscribe" on the subject line.

The Pocket Change Windfall: Each of our 34 back issues offers painless ways to get out of debt and save on the many expenses that confront us all -- taxes, credit card bills, mortgages, insurance, food, you name it. You can get all 34 for just $29.95 -- that's less than $1 each. To order, you can use our secure server, call 845-657-8245, or write to us at:

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Reprinted from The Pocket Change Investor, Issue #26
© 1999, Marc Eisenson & Nancy Castleman
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