A Suze Orman exclusive

Getting Out of Credit Card Debt? Priceless.

Okay, I know we've covered this one before, but it bears repeating: the average American is carrying about $9,000 in credit-card debt and paying 15 percent or more on that amount. It might not sound costly when compared to mortgage debt, which can be hundreds of thousands of dollars, but the impact on your finances is still steep. Do you realize the interest rate on a credit card is easily three times the rate on many mortgages? And it kills me when I hear people tell me they only pay the minimum monthly amount on their card debt. Do that and you will be paying off that money for decades. If you pay only the minimum due on an 18-percent card with a $9,000 balance, you're looking at a 31-year payoff period-and you'll end up making $13,000 in interest payments!

Here's what I want you to do: just add a small extra amount to each monthly payment. On our $9,000 example, if we add as little as $25 a month to the minimum, the entire amount will be paid off in less than five years, and we're stuck paying "just" $4,039 in interest. Better yet, if you add $100 to the minimum monthly payment, you'd be out of credit-card debt in about three years and have spent just $2,717 in interest payments.

Let's also review the strategy I mentioned in the my recent article on debt and credit. If you're carrying balances on multiple credit cards, the best move is to pay the minimum on every card and then apply all of your extra payment to the card with the highest interest rate. Once that card is paid off, switch the monthly payments you were making on it (both the minimum and the extra you added each month) to paying off the card with the next highest rate. Keep doing this until you have eliminated the debt on all your credit cards.

Are You Driving Yourself into Debt?
Do you suffer from red-light envy? You know what I'm talking about…you're sitting at a traffic light in your reliable-yet-boring $18,000 car and you see a beautiful new $50,000 car idling next to you that sends your envy gene into overdrive. All of a sudden you have to have a nice car. Stop right there, my friends! Please don't screw up your future by taking out huge loans to finance a luxury car you can't afford, just so you can impress people you don't even know. It's insanity. Cars are one of the worst investments in existence. Actually, let me take that back. Cars shouldn't even be thought of as an investment. The moment you drive them off the lot they are losing value and there's nothing you can do about it. I've yet to hear of anyone who refinanced their car after 10 years to help pay for their retirement. You get my point: buy a car to get you around town, not to impress folks. And if you already have one of those ridiculous cars with an equally ridiculous car loan, please work on getting it paid off ASAP.