Got Bad Debt? – Your Mid-Year Financial Check-Up #3

Here at Prime Time Money we’ve been focusing on how the mid-point in the year is a good time to revisit your financial situation and see where you stand.  To help get you started, I’ve put together a series of ideas to help you conduct your own mid-year financial check-up.

#1 – How is Your Spending?

#2 – Are You Saving Enough?

Third in the series is a review of your debts.

Got Bad Debt?

Take a moment to review your debt situation (gather up all your statements) and identify those truly bad debts still hanging around.  What do I mean by “bad” debt?  Isn’t all debt “bad”?  Well, deciding what type of debts are “okay” by you is a personal choice.  You may decide that NO debt is the ideal. 

For my purposes, “bad debt” is any unsecured debts (like credit card balances) I’m not paying off every month, OR any secured debt with an interest rate above 6% or 7%.  I don’t like this kind of debt because it keeps my money from being able to work for me elsewhere.  What kind of debts are you comfortable with?  Tell me in the comments below…

Start a Debt Reduction Snowball

Now that you know what your debts are and which debts you’d like to do without, let’s make a plan to get rid of them.  First, prioritize your debts (e.g. rank them according to amount or interest rate).  Next, write up a plan to start making extra payments on the first debt in your ranking.  Determine how long it will take you to pay off the first debt.  Plan it so that once that first debt is paid off, you can start on the next, and so on, until all your bad debt is gone.

Temporarily Transfer Your Debt

If you’re feeling extra motivated, don’t mind a possible small ding to your credit score, and you’re financial savvy, consider applying for a credit card with a 0% interest balance transfer rate and transferring your bad debt.  Don’t do this if your plan is simply to go back out and charge up another card, or if the transfer fees are above the amount you’d be paying in interest by keeping your balance on your old card.  Only use this method if you’re fully committed to paying off your debts.

Bonus: Make a Plan to Celebrate Getting Rid of Your Bad Debt

Now that you have a nice plan for getting out of debt, be sure and plan on how you can treat yourself and your family for the accomplishment.

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created this website back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.


  1. Instead of a credit card, I pay each time in cash using my ATM savings account. Every payday, I have a fixed amount automatically transferred to my COOP bank added to my share capital. So, what is left in my ATM is the extra that I again going to budget for the next days before payday.

    In the COOP, after each year I received a dividend from my share capital, so, it is a sort of investment. If I will not attend the COOP Assembly, my dividend is immediately be added into my COOP’s share capital.

    im from the Philippines.

  2. Wow this is very timely! I just paid all my credit card debts $680 yesterday…well its not much but if you live in the Philippines..thats still Php30k!

    As of now, my savings may not be that much but heck, I don’t have any debts to pay..I feel so free! Thanks for the post.

  3. I like the concept of prioritizing your debt. If you can stay focused and diligent, it really does work. The more you use it, the more powerful it becomes.

    Love the site!

    Be well.