I strongly believe in the Dave Ramsey plan. Search Dave Ramsey for more information.

He would tell you that you should hold $1000 in reserve as an emergency fund. Pay off $5000 now and work like the devil to get rid of the last thousand.

He says to cut up the credit cards. If you cannot do that yet freeze it in a block of ice.

Then you need to have three to six months of expenses put away. Suze says 8 months. What ever you are comfortable with.

Use only a debit card. Be sure that ALL of your money is budgeted. Budget even the savings, pay it first. Budget fun money so that you do not lose your mind in this whole process.

I would pay all but $1000. Keep that in savings for just in case. I wouldn't cut up the card. Even Suzi says not to because that could damage your credit.

thanks - makes sense!

Cutting up a credit card will not hurt your credit score. CANCELING the account is what hurts your FICO score and that is only temporary. The credit card companies don't know if you cut it up or if you keep it in a sock drawer. Cutting up the cards or better yet, shredding them, will keep YOU from USING them unless they are a store card which can be looked up at the store. It is gut wrenching for some people (myself included) to give up the security blanket of having credit cards 'just in case'. But you can do it. You can also commit to never using credit cards again. Just do it one day at a time. I had to learn this but it wasn't Suze's advice that I used. If you would like the name of the book that saved my sanity and helped me to give up my credit cards just let me know. I still have one card that I use on occasion so I am not perfect but I am on the road to getting out of credit card debt. You don't have to use your savings, you just need a really good plan to pay them down. I don't use the term 'budget'. I have a 'spending plan' for each month and review it several times a week . Using this plan I see how much income I have and what I need to pay my bills and live on. The book I used also suggests having a catagory for entertainment or dining out which is contrary to what Suze suggests. Depriving yourself of pleasure is a surefire way to fail. PLANNING for it actually gives you control . Its like starving yourself to lose weight...it only works for a little while. Right Oprah? You have to learn to think about debt in a different way. I don't subscribe to Suze's advice. I realize she really really wants to help people and I know she has helped a lot of people. I just use a method that works for me and it doesn't make me feel like a failure. Not that her method would, but it just isn't the best one for ME. Good luck

I would keep some savings. It doesn't have to be all or nothing. If you use all your savings to pay off your credit card and have an emergency you'll have to use your credit card to pay for that expense. Then most likely won't be able to pay off the balance when you get the bill, then the whole cycle starts again. I believe in paying more than the minimum payment, but I don't agree with Suze that you should devote every bit of extra money to paying off debt because of unexpected "needs" expenses such as car repairs then you will end up short of money and end up using your credit card.

I agree with you. I think you're referring to the same book I've read, it makes you look at debt differently, not making debt the center of your life. I think Suze's plan sets most people up for failure by just concentrating on the debt, and not creating some savings at the same time as paying off debt.

kimster06

I'm glad to see someone else that uses a method like the one I do. The book that helped me is by Jerrold Mundis titled 'How to Get Out of Debt, Stay Out of Debt and Live Prosperously'. It's old and out of print but it was on my bookshelf for years and years. One day when I got a notice from the credit card agency that my minumum payments went from $ 20 to $200 I was desperate and decided to sell books or anything else I could. That book was destined for sale but then something made me open it up and once I started reading it I think I finished it in one day. It was sorta start and stop on getting with the program and putting the advice into practice, but he addesses that in the book also. Is this the same book you read? If not I would love to know which one helped you.

By the way I keep a copy of his book at all times. Rereading it helps me stay on track. I also keep an extra copy to share with people I think are ready to change their spending habits. I wish you well on your road to financial freedom.

The book I read was by Carol Keefe "How to Get What You Want in Life with the Money You Already Have" I'm still pecking away at my cc debt, which fortunately is at a really low rate, but the debt is decreasing !

Didnt anyone watch the webcast? She clearly said in this market to hold on to your cash...its better to have cash in hand then a good credit score. If you were to lose your job tomorrow, and you used your savings to pay off the cards...how would you live??

I say hold on to your cash, build on it and pay more then your min balance...god forbid you lose your job or get sick and need cash and your without it. If you keep pressing forward you will look up and you will have grown your savings and paid off your debt.

Pay $4000 off now and $500 a month for 4 months.

You do not have to freeze or cut up your cards... that is a silly solution.

You need to show restraint and not use the cards if you cannot pay them off in a timely manner.

If you can't do that then I am sorry to say that your problem is not debt.

It is with self control...And paying off all the debt in the world with not fix it.

I say that in all seriousness.

Cutting up credit cards... freezing them in ice all make a person look unstable in my eyes.

Credit cards are a fantastic tool if you are mature and stable enough to have one.

The question then is, are you mature and stable? If not, find the tools to begin the journey to stability

Because having credit cards (especially frequent flier ones), good credit and ability to grow that credit is a wonderful thing!

I would cut up the card. Suzie says don't "CLOSE" the acct. You can always order a new card from the credit card company. Which usually allows enough time to rethink wether you need to use it in the first place.

Now the only problem right now that I see is if you use your savings is that if an emergency happens after you pay it off and the credit card company decides to lower your card limit you will not have any access to extra funds in a really emergency.

I had a WFB credit card with a high limit, great credit score, didn't use it much and WFB sent me a letter lowering my limit and basically leaving me with no credit -which then lowers your score etc. That is what is happening in todays current market.

Ideally you want to have a savings for emergency fund not a credit card. But if you use all you savings accept $1000 know that you will have to bust your tail to build it quickly.

I will say this again...

I you seriously need to cut up your credit cards, debt is the LEAST of your problems. It's a rediculous irrational band aid soloution to your problem.

YES YES YES pay off that credit card debt in full! Don't keep $1000 for emergencies while interest accumulates on the last $1000 of your credit card debt - keep the card for emergencies! Hopefully before a true emergency arises you will be able to build up a bit more savings, but you can't build savings when you're carrying that kind of credit card debt with those outrageous interest rates! You would probably feel sick to your stomach if you could work out how much of that debt was interest!

If it were any time but THIS time I'd say go for it. However, how would you feel if you paid off that $6k and then lost your job... and had no savings left. I would do the following first

I preface this by saying you need GOOD CREDIT to make this happen.

#1- If you can get a zero percent APR credit card with no fees, I would get one. Use this credit card for your expenses while the zero percent is in effect and make the MINIMUM payment (or a little more) each month.

#2- This will free up $ to go pay down the other credit card company- the one that is charging you interest. Take your pay checks and pay off THAT credit card as fast as you can.

#3- by the end of the zero percent time on the other credit card make sure you can pay off that credit card.

It's a great little game I've played and won before.

If you don't have the ability to get a zero percent APR card, I would NOT pay the other one off with all of your savings. What happens if you lost your job the next day? You would feel awful and wouldn't have any net to fall into. Pay down about 1/6 of it-- and then each month commit your self to pay XX dollars towards that debt. A call to the credit card company to ask them for a reduced pay off OR lowering of your APR might help as well. They don't advertise that you can do that- but they can!

GOOD LUCK!

When I look at
the silver cutlery set that I just HAD to have and have yet to use I can now
laugh - but I know that debt is no laughing matter.

If I were you I
would pay off $5000 and keep $1000 for emergencies. Set yourself a goal to pay off the last remaining
$1000 within 6 months even if it means that you have to find extra employment. After this the money you were using for debt
repayment goes to helping you rebuild and catch up with your life.

The most
important thing is not to use credit cards again but in order to do so you need
to figure out what you were using the cards for in the first place. Was it for pure indulgences, emergencies or a
way to try and makeup for a short fall between your fixed expenses and your income?

After a
whirlwind life of excess and then a terrible debt slump we smartened up and
worked like crazy to pay everything off – cards, loans, lines of credit, student
loans etc – and were debt free for 2 hours 18 minutes and 31 seconds. The car broke down on the way home from the
bank where we had just ceremoniously paid off our last credit card. Since we had no savings we had to use the
stupid card to repair the car.

Live and learn
and pay some more. We started
immediately to create an emergency fund but after 2 months we realized that we
also needed a “trouble fund” and a “save up” fund.

In our bad old
past lives we had used our cards for everything including buying all kinds of
“want it right now” stuff. When we
decided to get out of debt we just completely stopped shopping - other than for
necessities – and crossed our fingers and all other body parts. We had lady luck on our side so never had to
use the cards and after the 3 years of payback we could walk with our heads
held high but had to be careful not to get hit by a bus as all we had left was
some pretty ragged underwear.

The difference
between an emergency fund and a “trouble fund” is that the money in the
emergency fund should never be touched except for a real emergency – like
unemployment or illness. The trouble
fund will accumulate and then get spent on things that you need but weren’t expecting. Last month part of our trouble fund was used
to replace the timer on the washer. $120
house call and $95 for the timer? Are
you kidding me??!! For that kind of
money I’d rather take our clothes down to the river and beat them with a rock.

The “save up
fund” is for things we want (like a new washer or bigger rock) but will now
always pay for in cash.

Having stuff
that wasn’t paid for always made me feel guilty, nervous and insecure. Living within our means and without debt
makes me feel proud, relaxed and semi-secure. Getting too smug would just be asking for trouble.