Debt Weighing You Down?by Tim Manni
Try going on the “debt diet.” Wall Street Journal columnist Karen Blumenthal has devised several debt-cutting strategies that ironically mirror popular dieting techniques. Much like dieting, trimming your debt depends largely on the individual and the strategy employed.
The Jenny Craig approach (”prepared meals give your eating habits a fresh start”): otherwise known as the balance-transfer approach, consider transferring credit-card debt to another card with a 0% or other low interest-rate. “You’ll need a good or better credit score to qualify for the limited offers now available, and like the Jenny Craig program, there are costs and rules…”
The Atkins Diet (the high-protein approach): “You can pay off your debt more quickly with a much lower interest rate by using a home-equity line of credit…” Some experts warn against this approach of “replacing unsecured debt with debt secured by your home.” (Note, many default-wary lenders may not let you borrow as much as you’d like.)
The Grapefruit Diet (eating grapefruit or drinking grapefruit juice with every meal): “Using your 401(k) to reduce your debt is just as distasteful.” While you could borrow against your hard-earned savings, an unforeseen event like losing your job could prove catastrophic to your retirement fund.
Weight Watchers (balancing your diet with the support of others): Try asking a family member or friend for a loan with an interest rate far better that what they could get from their savings account.
Counting Calories (closely monitor your intake while continuing to exercise): This “making due with less approach” seems to be the safest and most common way to cut down your debt. Keep a close eye on what and how much you spend each week while trying put some aside any opportunity you get.
Be sure to read Blumenthal’s article for more tips.
READERS: What type of “debt diet” are you on, or have found yourself on?