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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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