3 ways to tackle debt

ATLANTA - We talk a lot about the importance of staying out of debt. But, sometimes you are already in, and we need to talk about how to climb out.

There is no single right way to get out of debt, but there are some ideas to take into account when sorting this out.

Start by finding a credit card pay-off calculator. It's a huge help. Let me show you how this works. We're assuming in this case that you have $5,000 in debt and are paying 20 percent interest.  If all you can pay a month toward that is $150, it'll take you 50 months to pay off that credit card. That's more than four years. And get this, you will pay $2,359 in interest. 

You really want to get rid of that debt faster. But how can you do it? You can switch to a lower interest credit card. 

Let's get that calculator back out.  Let's move that interest down from 20 percent to 11 percent and show you what a big difference this will make.  Your pay off drops a lot going from 50 months to only 40 months. And look what it does to the interest. It goes down more than $1,000 to $994. That's a big difference. 

Now getting another credit card might not be an option for you. Or, maybe you've heard about other things that sound more appealing like seeking a credit counselor. Good idea. But be careful. There are folks out there who will tell you they can help you get rid of your debt quickly. If you hear that run. It takes hard work.  There's no fast way out.  The FTC has recommendations for finding the right credit counseling service. 

But there's one more thing you might be tempted to do to get out of debt and that is take out a debt consolidation loan. And boy does it look good on the surface.  

All of your debt is rolled into one payment. The interest rate might go from 20 to 15 percent. And that monthly payment is lower, too, going from $150 to $100 a month. 

What's not to like? Well, too often, this happens. Your pay off goes from 50 months to 79 months. More than six and a half years. And look at the interest you'd pay - nearly $3,000.  That's not a good idea. 

If you are tempted to take out a debt consolidation loan, make sure your pay-off is fast. In this case, plug the new rate into the calculator, paying off the consolidated debt in the same time frame and see if you can manage the payment. 

But that only works if you stop the credit habit. If you don't break the credit card habit, you can end up paying your loan back and the new debt making things worse.