Credit card debt
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Credit card debt

Steps to becoming free of credit cards ...

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Many of us are suffering from credit card debt. Our society has become a credit driven society. Instead of saving money to buy the things we need over time, we rush out to the store and buy things we don’t need just to say we have them. As a result, many of us are drowning in debt we cannot control.

When you are facing thousands of dollars of credit card debt, seeing the light at the end of the proverbial tunnel is often difficult. We feel there is no hope of ever escaping the clutches of minimum payments, high interest, and finance charges. However, you can get out of credit card debt! What it takes is a little planning and a lot of self-discipline.

The first step to getting out of credit card debt is to start saving. You are probably thinking there is no way you can save money when you have all of these monthly bills to pay. But stop and think for a moment. What is the most common reason you find yourself turning to your credit cards? Is it because you have to have that expensive plasma TV, or is it because your roof started leaking and there was no money to fix it? Chances are if you are deeply in debt, you have started to turn to the credit cards only in emergency situations. If you have some money in savings, you can turn to that money before you turn to your credit cards. A good rule of thumb is to have a $1000 “emergency fund” in the bank. After that, work slowly at building a savings account that holds three months of income for your family. This way even if you lose your job you will have money to fall back on.

In order to find the extra money to set aside you need to have a budget. Most of us are scared by the word budget, but a well-designed budget is actually a liberating tool. You will not have to worry about whether or not you have enough money to make a purchase. You know how much money you have for each category of your household expenditures. Do not think of your budget as something you create and then leave the same for years and years. Remember, your monthly expenses are going to change from month to month. Each month, sit down and evaluate your budget. If you are married, do this with your spouse. Decide together how you are going to spend your money.

As you create your budget, look for areas that you can decrease spending. Do you buy a Starbuck’s coffee every morning? At $4 a cup, this adds up to over $100 a month! Imagine where your credit card debt would be if you applied that money towards your balance each month instead. Perhaps you could invest in a cappuccino maker for your home to help you save money on your coffee needs each day. Do not make your budget so restrictive that you feel as though you are dying, but make it something that you can live with while eliminate unneeded spending.

Once you have your emergency fund and budget in place, it is time to tackle those cards! Start with the card that has the lowest balance. Pay as much as you possibly can on this card. You need to at least double the minimum payment. On all of your other cards, pay only the minimum payment. Now, when you pay off the lowest card, throw a little party to reward yourself! Then the next month take what you were paying on the card you just paid off and roll it over onto the next lowest balance. Remember to add the payment to the minimum you are already paying. As you continue to do this the amount you are paying towards your lowest-balance card will continue to increase, and you will see your debt shrinking before your eyes.

Once you pay off that card, stop using it! The biggest mistake that most consumers make when they are working to pay off debt is continuing to use the card as a matter of convenience. If you need to have a convenient way to pay for your purchases, get a debit card connected to your checkbook. Just remember to track those expenses.

Finally, once all of the cards are paid off, eliminate all but one. Having one credit card is useful when you need to make online purchases or if you have a large-scale emergency. Keeping one card open also helps your credit history. However, you can put it in the freezer in a large chunk of ice to ensure that you only use it when it is needed! This stops impulse buying and helps you stay out of debt! (don)
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