The devil with debt

Extinguishing your debt leaves you richer—both financially and emotionally. So use these smart strategies to beat back the burden:

• Hide the plastic. Don't buy anything on credit unless you have the cash to purchase it outright. You may still decide to charge the purchase, but pay off the entire purchase when the bill arrives. That way, you're using credit as a convenience, and it won't compromise your financial future.

• Inventory your debt. List your outstanding balances along with the interest rates charged.

• With all credit cards, always pay more than the minimum monthly payment.

• Your first priority should be your highest interest rate debt. Pay the minimum payment plus any additional amount you can afford. Once this debt is paid off, apply the money you were paying toward your next highest interest rate debt and so on. Keep paying the minimum due on the others.

• Perseverance is a great virtue. Continue to pay off your debt in order of priority until you're debt free. If you're an average American, this may take years, but don't get discouraged. A debt-free future—and financial freedom—is just around the corner.

• Save for a rainy day. Most Americans are in credit card debt because when they needed cash in an emergency they didn't have a cushion to fall back on. Instead, they used plastic. So you'll need to build in that cushion to stay out of debt the next time you're in a crunch.

Fritz Wood, CPA, CFP, Veterinary Economics Personal Finance Editor, is a financial consultant who owns H.F. Wood Consulting in Lake Quivira, Kan.

Fritz Wood, CPA, CFP