Part I - Dealing with Debt, Hardyville Style

Debt. It smiles an oily smile and invites us to party. Heedless, we surrender ourselves to its bondage. Debt. It urges us, "Live like there's no tomorrow!" -- never mentioning that tomorrow's going to feel like the kind of hangover you get by mixing Mad Dog 20-20 with cheap tequila. Debt. It hooks us like a pusher in an old movie. Only this time the drug is really, really that degrading.

But.

In Hardyville, we have ways of dealing with Debt. Drastic ways. We drive Debt out of our community. We beat Debt to a bloody pulp. We reduce debt to a quivering heap of submission. Debt begs for mercy. But mercy isn't ...

Carty looked over my shoulder at the words on the screen. He snorted. "Claire's writing like she's been at the cookin' sherry again," says he to all and sundry at the big round table at the Hog Trough Grill and Feed. "Jeez, woman. Can't you just say, 'Hardyvillians don't get into debt if we can help it. And if we do, we pay it down fast?' That's what you really mean, isn't it?"

"Well, yeah. But I'm a writer, Carty. I'm not earning my keep unless I deliver a certain percentage of metaphors, similes, conceits, tropes, and ... you know, writer stuff. It says so right there on my poetic license."

"Bullstuff," he snorted. "You promised a column on getting out of debt. Life would be easier if you'd just deliver."

Wounded, I turned my laptop away from his view and went on typing.

"The worst part of debt isn't owin' the money," Marty Harbibi pontificated. "It's not even the interest you have to pay, though that can be more fierce than people like to think. The worst is being trapped. Hopelessly trapped, it sometimes feels like."

"The hell you say," Nat shook his head. "The worst part of debt is all of the above. And more."

When paying off credit cards A little goes a long way Balance: $3,000 Interest rate: 19.99 percent Monthly payment Months to payoff Interest paid $75 64 $1,786.83 $80 58 $1,574.48 $100 41 $1,071.35 $150 24 $594.48 $200 18 $408.01 Calculate your own credit-card payoff here Table 1

I had to agree with Nat. When you're in debt, it seems natural. But once you've broken free, the whole process of borrowing and owing just to live your regular life looks grim. It may be "how things are done" in party-hearty, fiscally unreal twenty-first century America. Occasionally it may even be necessary. But when you view it from outside the debt world, it looks different.

My Cabin Sweet Cabin isn't much, for instance. Just a few hundred square feet and one room. But it's warm, cozy, cute -- and paid for. Sometimes I wish I could get a loan to add a bedroom. I lived in mortgaged property all my life until five years ago. But today the prospect of sharing my very own private home with a banker seems a lot like having deadbeat relatives move in, paw through my stuff, and eat up all the best food. If I really want that bedroom, I'll save for it and build at budget rates, thank you.

"Budget," Marty stated, continuing a thread of the conversation whose beginning I'd missed. "Ex-spurts say if you want to get out of debt, you should start with a budget and force yourself to stick to it."

Sorry, but I don't think so. Budgets work for some people. But a lot of us would just resent all that bookkeeping. The constant discipline of living under some dictatorial budget regime chafes us and make us more likely to give up.

I say forget the budget, unless you happen to be the highly linear type. Just choose the debt you hate the most and start slaughtering it with the Death of a Thousand Cuts. Kill it. Annihiliate it. Stomp it. Just that single debt.

I call this the "One Big Target" debt-slaughtering plan.

Pick One Big Target at a time. Destroy one debt so it will never rise up and grab you again. Then when you've killed the one you hate the most, target your next enemy debt and blow it away in turn.

Don't even think about the vast goal of Getting Out of Debt. Forget the big picture. It can be too overwhelming if your debt load is heavy. With One Big Target, you're face to face, in personal combat, determined to win against just ONE evil enemy debt. And you know, you just know you're tough enough to beat that one. Right?

Or (this is even better), direct your fiercest slashes at your most hated debt, your One Big Target. But at the same time (since you're so strong and such a storied debt-killing warrior) poke and harry at least one of your other debts in some minor way. Don't put a lot of effort into the second debt. But you'll see; those little stabs will eventually make a huge difference.

Let's say, for instance, that the debt you hate the most, your One Big Target, is a high-interest credit card on which you ran up $3,000 worth of stupid follies "consumer debt." You're going to aim your main attack at that. Okay, you're not rich. But every month, you can -- you will -- find an extra $50 to pay toward it. (More about finding the money shortly.)

Look at Table 1. Look how fasssst you can pay even the nastiest debt down by throwing even modest additional money at it. Soon: One Big Dead Debt.

If you concentrate only on that one debt, you're doing great. Here, check it out for yourself on this credit-card debt-reduction planner.

But then what if, at the same time, you sneaked an extra $10 or $20 per month -- just the price of a lunch or a movie and a snack -- and tossed it at your mortgage or car payment? Now, that's satisfying -- kicking two ugly debts in the backside at the same time. You can think of yourself as a sort of a fiscal Jet Li while hardly making any extra effort.

Table 2 shows how much you can accomplish if you fling even very small extra sums of money at your mortgage when the mortgage is brand new. Amazing!

If you're already several years into your mortgage it doesn't work quite as dramatically, but it still works. Painlessly. Check it out.

And here's how the same thing works with a car payment.

"There's another way to pay your mortgage off more quickly," Nat reminded us. "Make one extra payment a year by changing the way you make your mortgage payments. The extra one all goes toward your principle.

"Yeah, but if you're going to pay off any loan faster than the schedule calls for," Janelle said, waltzing up to fill everybody's cups with the Hog Trough's famous horse urine coffee, "check to make sure there are no pre-payment penalties."

"There usually aren't, these days," Carty huffed "Except on weird stuff like loans with balloon payments or interest-only loans. In which case you are skunked anyhow. Man, why do people get into loans like that?"

Paying a little extra on your mortgage Get years of your life back Mortgage amount: $100,000 Interest rate: 7.5 percent Term: 30 years Extra amount you pay each month Number of payments you eliminate Money you save $10 18 $9,173 $20 33 $17,000 $100 115! $56,316 Calculate your own early mortgage payoff here. The above figures show the results if you begin paying extra with the very first payment. The calculator lets you figure your own results no matter how long you've already been paying. Table 2

Either desperation or too much enthusiasm for chasing bright, shiny bubbles, I fear. Or the classic Failure to Read the Fine Print.

"And don't forget the time-honored -- and relatively painless -- method of paying off your credit cards by making payments every other week instead of every month," I said. I made a note to myself to explain that method in a sidebar.

"In all things," I said, "and above all, the standard minimum payment is your nemisis. Kill the minimum payment, whatever it may be!"

"How, though? Some of us already live paycheck to paycheck. Or payment to payment," Janelle sighed.

"Most of us have the extra money right after we get paid," I said. "If we make that one extra-large payment before we go out for business lunches or go to the mall, we don't have to make any fancy budgets. We just plain won't have the money for luxuries later on. Because we'll already have spent it in a better cause."

"Yeah," sighed Janelle, hanging around the table with her ever-present coffee pot, "But some of us don't have money for lunches or the mall in the first place -- or even basic bills -- anyhow. So then what?"

"Earn more. Spend less," Carty shrugged. "Have a garage sale. Brown-bag your lunches. Sell the spare TV set or the extra car. Don't buy new clothes this year, or buy them at a thrift store. Take a temporary part-time job. Cut down temporarily on the money going into your 401(k) plan. Switch from full coverage insurance to major medical. Give piano lessons."

"Borrow from relatives," Marty offered.

The rest of us stared at him, aghast.

Um. No. That's probably about the worst idea in the world. Adding financial entanglements to all those emotional obligations ... ugh. Anyhow, best thing is to show your family that you can handle grown-up obligations like a grown-up.

"Eat beans and rice!" Janelle suggested.

"And rice and beans!" says I. "Temporarily switch to using your storage foods. Or make it a challenge to eat as well as you can on as little money as you can."

"Resist temptation," Nat said, practically.

But I like temptation! I whispered to myself, siding with Oscar Wilde against all practicality. Aloud I offered, "Teach your children that incredible valuable word, NO! My dogs understand it; so theoretically even an adolescent should be able to grasp the concept." (I might not want to resist temptation. But what the heck. It builds character in the little rugrats.)

With credit cards Two payments = one fast payoff Here's a time-honored way of whupping your credit-card debt. I don't know who first came up with it, but it's been helping people painlessly beat their bills for years. The key is to make one payment every other week instead of one payment a month. When your credit-card bill first arrives, immediately pay one half of the minimum payment. Two weeks later, pay the other half of the minimum payment. (You must make sure both halves arrive before the due date; otherwise you'll be hit with late charges.) Then keep paying that same, exact amount every two weeks on the dot until the balance is paid off. Two things make this plan so smart. First, by paying bi-weekly, you're making the equivalent of 13 monthly payments. (That is, instead of 12 payments, you're making 26 half payments 26/2 = 13.) Second, even as the minimum required payment goes down, your payment amount holds steady. The more steadily you pay this way, the faster you reduce the principle and the more interest you don't incur.

"How 'bout this," Nat offered. "If you get a bonus, a tax refund ..."

"You mean people are still out there paying taxes?"

"... or a money gift, or a raise, throw it at that one big debt."

"Throw 75 percent of it at your one big debt," I argued. "Because, c'mon, you gotta give yourself a few rewards along the way. Take the other 25 percent of any gift or bonus you receive and ... live!"

"Okay, Ms. Writer," Carty said, downing his cup of sludge coffee, "So how do you choose which debt to make your One Big Target?"

"Well, all the ex-spurts say pick the one with the highest interest rate," Marty interjected. "This one guy says it darned well, too."

I'm no ex-spurt, so I feel free to disagree. Sure, if you look only at the financial logic, that's definitely the way to go. But human beings are complex bundles of passion and reason. I think it's best to pick the one debt you're most motivated to go after. Maybe you'd pick one that's already down fairly low that you can knock off easily. That would give you both a sense of accomplishment and some extra cash in fairly quick order. Maybe it's a debt to some institution you've come to hate, so you're super-motivated to sever all ties with them.

Or maybe you'd be most motivated to pay off a debt of honor. The number one debt I always wanted to get rid of was the tab I ran at my vet's office. The ex-spurts would have said that was the last one to attack, since my dear kind vet charged no interest at all. But I wanted to look that woman in eye, equal to equal. And I couldn't do that as long as I owed her money.

Whatever debt you knock off first, remember you've then got the entire amount of that payment that you can put to work slaughtering the next enemy.

Keep it simple. Focus your energies on One Big Target. Slaughter it. Then, swaggering in triumph, move on to your next conquest.

• The month after you've finally slaughtered your first debt, take the entire amount you would have paid on your One Big Target and use it to celebrate. Treat yourself. Treat those poor kids to whom you've been barking, "No, no, no" for the last year.
• Then the next month and every month thereafter until you've beaten Target Two into submission, throw that amount at the next debt on your hit list. For instance, if you've paid off your UsuryCard bill at $150 a month, but you've been paying just $75 on your BancScrooge Scrooge-O-Card, now start paying $225 to BancScrooge every month.

Oh yeah. And when all that's done ... start paying cash. It drives the debt-pushers and their co-conspirators the database trackers purely crazy. And every time you pay off one debt and don't incur another, you own that much more of your own future, free and clear. All yours.

Read More by Claire Wolfe