How to Get Rid of Credit Card Debt This Year

Credit card debt will bury you alive. If you apply these proven debt busters you will get rid of credit card debt this year, and be on your way to a better financial future.

Difficulty: Moderately Challenging

Instructions

1. DEBT BUSTERS STOP BUILDING DEBT.
   
   Credit card debt will beat you if you don't stop throwing dirt back into the same hole you are trying to dig out. If you keep charging to your cards you won't eliminate debt. So debt busters who are serious lock away their cards. You can't close the accounts (and you don't want to or it will hurt your credit). Just lock them in a box in your home and mail the key to an out of state friend.

2. 
   Try a Cash Budget

   DEBT BUSTERS BUILD A REASONABLE BUDGET.
   
   Go through your expenses for the last month and categorize them. See how much you spend on entertainment, groceries, eating out, utilities, cable, phone, etc. Include everything. Don't forget insurance, life insurance, etc. How much are you bringing in after taxes? How much is going out?

3. 

   DEBT BUSTERS ELIMINATE BUDGET CHUNKS.
   
   If you want to get rid of credit card debt, you have to free up cash to pay down balances. While a cup of coffee here or there eventually adds up, you need to get the interest off of your back now. Go back through your budget and only circle those items you will literally die without - food, heat, etc. Then circle those items you can't get out of even if you wanted to - mortgage (unless you can sell), contracts, etc. Everything else can get cut.
   
   Find a way to cut out hundreds of dollars from your budget for next month. Drop a cell phone or two. Eliminate the internet and cable. Stop eating out. End the movie theater trips for a while. Carpool to work. Stop investing in your IRA or 401k for a while if you have to.

4. 

   DEBT BUSTERS PAY OFF HIGH INTEREST CARDS FIRST.
   
   Arrange your credit card statements in order of highest interest to lowest. One of the greatest debt busters is to pay off the highest first. Interest on credit cards makes it really tough to dig out. So get rid of as much of it as possible as early as possible.

5. 

   DEBT BUSTERS SET A GOAL AND STICK TO IT.
   
   Make it your goal to get out of debt this year. Mark out the months on your calendar. Determine how much you have to pay every month to do it. Find that space in your budget, or get an extra job to make up the difference. Start other income streams like writing or selling online to help do it.
   
   See more tips below as well as other related resources on this page to help get rid of credit card debt.

Tips & Warnings

• Schedule a reward if you make it. If you made a lot of sacrifices in your budget, then just putting them back in may be enough. If not, save a few more months and give yourself something you wanted...and pay for it in cash.
• Form a credit card debt elimination group. Find like-minded friends and meet bi-weekly to share successes.
• Consolidation loans only help you if they reduce the overall interest rate of your loans. Avoid them unless the math is clear that you will save money by consolidating even after origination fees.
• Be sure also that there are no pre-payment penalties to any new loans. Better just to pay off what you have.
• Don't pull out your credit cards again until you have proven that you only buy what you can pay for that month.

Resources

• Pay Off $1000 of Debt a Month by Writing Online
• More Suggested Reading for Personal Finances

[botticelli728]

on 7/30/2009 Another excellent article. 5*

[dorigillman]

on 7/30/2009 great ideas for getting out of debt.

[cavalrywife]

on 7/29/2009 Great article and great tips to rid yourself of credit card debt. 5*