Things You'll Need:
- Pen and paper, spreadsheet program, or money management software.
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Step 1
Stop using your credit cards! You will never get out of debt if you continue charging your purchases. Putting away your cards is the first step to becoming debt-free.
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Step 2
Contemplate all the impulse buys that have led to your debt. Many credit card purchases are things you don't need. I was sad to realize that almost all of my $10,000 credit card debt was for junk I could easily live without.
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Step 3
Reject the idea of the "emergency" credit card. People do sometimes keep one card for emergencies when they stop using the others, but this card will likely just be used for unnecessary spending. Until you have control of your spending habits, you should not use any credit cards.
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Step 4
Begin an emergency fund. Start a savings account, no matter how little you can afford to contribute at first. Add to your emergency fund with every paycheck. An emergency fund is an important step towards breaking the debt cycle.
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Step 5
Compile your most recent credit card statements, write down the total amount due, the minimum amount, the payment date, and the interest rate. A spreadsheet program or money management software can help track this information.
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Step 6
Consult a credit card counseling agency if you cannot afford to pay even the minimums on your credit cards. These agencies can negotiate with credit card companies for reduced interest rates, making the repayment process easier.
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Step 7
Pay as much as you can possibly afford to the highest interest rate card while paying at least the minimum on the other cards. When you carry a high balance, the interest can quickly become unmanageable.
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Step 8
Put any extra income, such as gifts, bonuses, or raises, towards your debt. It's not fun, but little by little the debt will go down and your feeling of financial security will increase.
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Step 9
Reinforce your commitment to paying off debt by continually tracking the balances on all your cards. Realizing your progress will help you stay focused.
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Step 10
Stay debt-free! Once your credit card debt is gone, put the money you were spending on debt repayment into your emergency fund. Enjoy the feeling of financial security that comes with having savings instead of credit card debt!
Comments
Emike said
on 7/22/2008 great article!
Emike said
on 7/22/2008 great article!
Emike said
on 7/22/2008 great article!
Emike said
on 7/22/2008 great article!