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As we recover from the worst economic meltdown since the great
depression we continue to see a trend of high unemployment,
foreclosures and bankruptcies.

Money is still being thrown away due to high debt carry over and the
even higher interest rates attached to them. These debts can stop you
from getting loans, renting or buying a home, purchasing a car or even
getting a job. However, making some small sacrifices (like that
morning cup of coffee and $10 lunch) can put you on the right road to
financial freedom.

The following are 5 steps to beginning the process:

1) Pay More Than the Minimum Due –

If you had a $3,000 credit card with a 17% interest rate and paid only
the minimum, it would take you approximately 10 years to pay it off in
full costing you $2,241 in interest. This is exactly what the credit
card companies want you to do because that’s how they make their
money. Paying down more than the minimum will not only shorten the
amount of time it takes for you to pay off your debt, it will also
save you money in the long run.

If you’re struggling to find the extra money each month to pay more
than the minimum I would suggest you begin to cut back on some of the
less necessary expenses that you may have.

2) Aggressively attack the Higher Rate Cards –

If you have credit cards that have a lower rate, consider doing a
balance transfer from your higher rate cards. This will significantly
decrease your interest payments, freeing up more money to pay down
debt. If the lower rate card does not have enough available credit in
order to do the transfer than the second option would be again to pay
more than the minimum on your higher cards to get rid of those faster.

3) Take Out a Second Mortgage (Home Equity Loan) –

If you are a homeowner, taking out a Second mortgage or Home Equity
loan to pay down debt is not a bad idea. Typically the rate on a
second mortgage is going to be less than your credit card and the
interest that is paid is tax deductible giving you extra savings.

4) Borrow from your 401K –

Some financial experts cringe at this idea but, personally, I am a big
supporter. Borrowing from your 401k to pay down debt is a good idea
because the interest rate on a 401k loan is typically very nominal and
in most cases the principal and interest from the loan is put back
into your 401k. In essence, you are borrowing from yourself and paying
yourself back.

5) Renegotiate Lower Rates –

Last but certainly not least, you can renegotiate lower rates. Most
creditors would rather work with you and lower your rates than lose
you to another bank that’s offering an introductory rate. This becomes
more the case if you have a favorable paying history. A closed mouth
doesn’t get fed! The worst thing your creditor can say is no, but
trust me, you may be pleasantly surprised.

The state of the economy can be frightening for most but only if you
are not prepared. The more proactive you are the better prepared you
will be for that rainy day. Begin to pay down debt and get a head
start on financial freedom!

Ash’Cash is a Business Consultant, Motivational Speaker, Financial
Expert and the author of Mind Right, Money Right: 10 Laws of Financial
Freedom. For more information, please visit his website,

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