This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Burdened By Tyrannical Debt? Declare Your Independence

Independence Day is an occasion to celebrate the Founding Fathers and the freedom from tyranny they helped earn for the nation. Yet millions of Americans today voluntarily subject themselves to another form of tyranny: the type caused by an excessive debt burden.

This Independence Day, resolve to win your freedom from this oppression. While there are no instant cures for debt problems, discipline and common sense can help you earn your independence from debt over time.

To begin, it's important to note that different types of debt require different approaches. Here are tips for overcoming three of the most common varieties.

1. Credit card debt

Consumers really lose out today when it comes to credit card interest rates. While the bank rates you earn on your deposits have dropped to a fraction of 1 percent in recent years, interest rates on credit cards have dropped barely half a percentage point since 2008, and are still above 13 percent on average. So if you carry a monthly balance on your credit cards, you are paying a high price for your debt. Here's how you can eliminate it:
  1. Stop the bleeding. If you've been racking up credit card debt, the first step to freeing yourself is to take the cards out of your wallet so they can't do any more damage. Forget the old commercial -- your new credit card slogan should be, "Don't leave home with it."
  2. Prioritize your debt. If you have multiple cards, find out which ones have the lowest interest rates, and transfer as much of your debt to those as you can (after you check for any balance transfer fees). If you can't take all the debt off your high-interest cards, at least start targeting the card with the highest rates for your largest monthly payments so you can pay down the most expensive balances first.
  3. Make more than the minimum payment. Minimum payment requirements are usually very reasonable, but this is a false comfort. The ability to make a small payment only prolongs your debt and thus makes it more expensive. Seek to exceed those minimum payments by as much as you can.

2. Auto loan debt

A big issue with auto loan debt is that loans are getting longer and longer, so people barely have time to pay off one loan before it's time to buy a new car. Try instead for a cycle in which you are free of auto loan debt for roughly half the time you own your car. Here's how:
  1. Borrow shorter than the useful life of your vehicle. Some auto loans now stretch out to eight years -- or roughly the useful life expectancy of a car. Borrowing shorter will mean higher payments, but this will cost you less over the life of the loan and you will be free of the debt before your car is ready for the junkyard.
  2. Maintain your vehicle. Sensible maintenance can prolong the life of your car, giving you the chance to own it free and clear for longer.
  3. Stay committed to your car. Don't give into the temptation to buy a new car every few years. It can be very rewarding to bond with a car and see just how many miles you can get out of it.

3. Mortgage debt

We have recently seen the lowest mortgage rates on record. But this may be a mixed blessing, as future home buyers will find homes far less affordable if rates return to normal. With rates already starting to rise, here's how you can make your mortgage burden more manageable:
  1. Compare mortgage quotes. Don't assume all rates are the same. Comparison shopping can make a difference, and when you are borrowing for 30 years, even a few basis points can add up to a lot.
  2. Pay attention to refinancing opportunities. Over the life of your loan, there is a good chance you will witness a dip in rates at some point, so don't let it pass you by.
  3. Use home equity sparingly. Home equity is something to be built up, not spent. Try to avoid home equity loans unless you are borrowing to improve the value of the property.

America's independence wasn't won in a single day, but the nation celebrates July Fourth because the signing of the Declaration of Independence represented a pledge to win that freedom. Similarly, earning your independence from debt may take some time, but you can make this Fourth of July the day you pledge to get started.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.70 -0.60%
FB $101.91 0.90%
GOOG $683.11 -0.15%
TSLA $150.47 4.73%
YHOO $26.76 -1.25%


Chart of I:DJI
DOW 15,660.18 -254.56 -1.60%
S&P 500 1,829.08 -22.78 -1.23%
NASDAQ 4,266.8370 -16.7550 -0.39%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs