My sister-in-law recently came to me and asked me to be her financial tutor. Knowing this is a topic that I am passionate about I was eager to help.
She, like many people I’ve helped, did not have a good tab on her financial diet. You know, just like tracking calories for weight loss, you must know the ends and outs on every aspect of your debt.
She was instructed to track her expenses but more importantly, figure out who and how much of her money was being spent in interest charges.
1. Get over yourself!!!
Do the research and find out all the interest rates on all your debt. There is so much shame and guilt attached to finances and debt. Facing it head on and being honest can be one of the most freeing experiences to getting out of debt.
She and my brother had a mortgage, student loans, and multiple credit cards. They had no clue what the interest rate was on any of their debt.
I tasked them with calling all their lenders and finding out the term of their loans.
2. Call and talk to your credit card company
For the sake of this post, and the #1 thing I suggest, is, call and talk to your credit card company. It WILL be uncomfortable. Know this. Then put your big girl pants on and get your mind right.
Remember, you are a mom, you birthed a baby. You are basically a superhero. I am a HUGE fan of power posing before I make any phone calls of this nature.
Stand in the superhero position. Arms on hips, chest and head held high for 2 minutes. Research has shown that doing this will boost your confidence!
3. Know your worth.
Have you had that same credit card for 3-5 years? Have you made payments on time for at least 8-12 months? Theses are great bargaining tools when trying to lower your payments.
On the flip side, have you been inconsistent with payments? Only had the credit card for 6 months? That is ok! Its important to know where you are so you can know where you are going.
In the case of my family, they had $15,000 of credit card debt at 17.7% interest rate. They have had the credit card for 8 years but had times where they fell behind on payment. Knowing this information gave them a lot of bargaining power when they made their phone call.
4. Time to make the call.
We will assume that you have good payment history and have had your credit card for several years. Being polite, but firm, let the representative know that you have enjoyed the rewards your credit card has offered (even if you don’t use them!).
Let them know how long on a loyal customer you have been and that you are excited to maintain your relationship, but would like to have a 0% interest rate for a year.
Its important to ask for the whole enchilada!! Don’t let someone’s else’s “NO” be yours!! Chances are they are not going to grant this. That is ok!!! Now they know you are serious about getting your interest rate down.
It’s then you say that you want your interest rate lowered for being such an excellent customer. If they say no, ask to speak to a supervisor. Repeat speech again.
My sister-in-law was terrified to make the call and begged me to do it for her. I see this a lot. Its ok to be scared. You may not feel entitled to it. Perhaps the shame and guilt make you feel you deserve to “get what you got.”
But remind yourself that money is a tool and to an extent a well-played game. You must play the game to come out on top. Her credit card company did not grant them 0% but they lowered the interest rate to 14.45%.
WE WON!!! We had our first victory!!
At their previous rate they would pay $2,550 a year and now at their current rate would pay $2,167. That is a savings of $382 dollars!!!!
Hey wait, we are not done. We have more to do and calls to make!!!
5. Download credit karma. Its free. It takes 5 minutes. It might be one of the most powerful apps you will use. Knowing your credit score, even if bad, is powerful knowledge.
Once they downloaded the app, they discovered that my sister-in-law had an outstanding balance to an old apartment complex deposit she lived in before they were married.
This was negatively impacting her score month after month. The great thing about the app is they list the number to the creditor for you to call to remedy the debt!!
We called the creditor and took the necessary steps to resolve the unpaid balance.
6. Call another credit card company and try and transfer your debt.
You do not have to make the call, but hey you’re on role, so why not. Most credit card applications have an easy step by step guide on how to transfer your debt.
Its important you read the fine lines and know the exact details on the card. The goal is to transfer as much of your debt to a 0% APR card with low or zero transfer and introductory fees. The better your credit score the better chance you have at a great card.
We chose to just do the online application. Within minutes we were granted a $5,000 dollar credit card with zero fees and 0% APR for one year!!!!
Now they will have 2 credit cards. One with a balance of $10,000 and one with a balance of $5,000. So, let’s do the math.
Now we have one credit card with a balance of $10,000 at %14.45 making an interest charge of $1,445.
We went from owing $2,167 a year to $1,445 saving another $722!!!!
6. Time to make a plan.
Pay the high interest with as much money as you can and let the 0% ride.
They will now pay the minimal monthly payment on the $5,000 credit card and work feverishly to pay off the $10,000 on the high interest rate card.
I instructed them to make a spreadsheet documenting this and setting an alarm on their phones to remind them when the year is up on their 0% card. Because, guess what? In a year we will do it all over again. Then their credit will be better, and debt will be less.
In about 10 minutes, we downloaded an app, made a phone call, and put in an online application for a credit card. Total savings of $1,104.
I have never made anyone that much money that fast.
Remember mommas, we birthed children. We can handle a 10-minute phone call.
And, this 10-minute phone call could save you a whooping $1000 or more.
What other measures are you using to clear your debt? Please share in the comment below so we can learn more
PS: This a guest post from Caitlin Quinn. Cat lives in Tennessee, she’s passionate about helping people get right with their money
Connect with her on [email protected]