Credit Card Debt Elimination

Credit card debt is one of the worst debts to have.  It can be catastrophic to any type of spender.  If you have credit card debt, you know how easy it is to fall in that mess and that it is especially hard to get out.

Do you want to start a process of credit card debt elimination?  If so, I can help.  I will help you set up a plan to pay off all your credit cards and help you get it done.  I have to warn you, it's going to take some hard work, but it all will be worth it.

Set it Up

In order to allow for the most effective credit card debt elimination, you will need to organize all your cards.  You need to set them in order from the card with the highest interest rate to the card with the lowest interest rate.  This is how you will minimize interest payments.

If you understand interest rates, you know that a higher interest rate means more interest.  In bonds and investments, that's a good thing, but in credit card debt elimination, that is a very bad thing. 

Look at it this way:  You have a credit card with a balance of $1,000 and you know longer charge to it.  The interest rate is 10%.  You have another card with a balance of $1,000 and you also don't charge to it.  The rate on this one is 25%.  You are going to owe $100 in interest on the first card each year and $250 in interest on the second card each year.  I think you understand that paying less is a good thing and you will want to pay off the highest rate cards first.

Even if the card with a lower rate has a smaller balance, you want to pay the higher rate first.  You might think you could just get the smaller balance cards out of the way, but this is a very bad idea and can cost you.

You may be tempted to put all your money towards the highest rate card and nothing towards the lower rate cards.  This is also a bad idea.  While you want to put more money to the higher rate card to pay it off faster, you need to at least pay the minimum on the other cards to avoid credit damage, creditor calls, fees, etc.

Basically, you need to pay your minimums each month to stay above water, but you need to pay even more to your highest cards in order to pay them off.  If you continue to just pay the minimums, you will never pay them off.

Make a Savings Plan

Do some number crunching and try to figure out how much money you'll need to pay towards your debt overall, after the minimum payments, in order to get out of debt in a specific amount of time.  If you can, try to figure out more precisely by adding in interest.

Set a date that you want to have your debt paid off by and you will be more likely to pay it off.  Throw everything you can at the debt, but also try to at least hit a minimum savings goal each month.  This will all contribute to paying it off faster.

The less you have to pay in expenses, the more you can put towards your credit card debt elimination.  Figure out how much you are paying out each month.  Include everything you ever spend your money on from the miniscule expenditures such as snacks and coffee to the big expenses such as insurance and mortgage or rent payments.  Include your minimum credit card payments as expenses so that they are not left out.

Subtract your expenses from your income, include only take home pay.  The higher the number, the better because this is all money you should be able to pay towards debt.

Try to increase this number as high as you can get it.  The higher it is the better.  Cut out all the unnecessary expenses.  Do you really need to go out to eat 3 times a week?  Learn to cook inexpensively at home.  Do you really need a cup of Starbucks or Dunkin Donuts coffee every morning?  Make your own coffee at home.

There are countless ways to save money, you just need to think about it.  Look at each expense and try to figure out if you can either cut it out or cut it down.  For example, if you have a cell phone, you might be able to cut it out or you could cut out texting and other extras and bring it down to the cheapest plan.

Consistently Work Towards Credit Card Debt Elimination

This is probably the most important.  You have to keep at it and keep working or you may never get there.  That is what is so bad about credit card debt.  Once you have the debt, it's not just going to sit there until it is paid off, it's going to grow and grow.

Zap that debt before it grows any more and cut the stress while you are at it!