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Breaking Free Paying off Credit Card Debt

Updated on July 31, 2012

So do you really want to get out from underneath your credit card debt? Are you sure? I’m not going to lie. It is going to hurt. You been to all the guru’s, and listened to every one and their brother. You may even have tried to take their advice. When everything is said and done, you still are under a major pile of debt. Maybe it has even grown. You want to throw in the towel, and bury your head under the sand. After all you figure by now that it is never going to go away.

The first thing is that you need to believe you can do this. You may have failed 100 times in the past, but you don’t have to fail in the future. You just need the right mind set, the determination, and the teeth grinding grit to make some sacrifices.

What? Wait just a minute, did I just read the word sacrifice? Yes, unfortunately you did. This isn’t going to work without some type of sacrifice. It doesn’t have to be a big one, but it does have to happen. Yes, I hear you groaning. If you believe in the Bible like I do, go ahead and read the next paragraph. Otherwise, you may skip it.

Nothing is impossible to God and to those who believe. It is a paraphrase. It is something I do believe in. I would pray to God about it. Believe that He can help me get out from underneath anything that is holding me down. Have faith that what I believe for is going to come to pass. Along with faith, I need to take action also. In this I also need to believe that God is guiding me, and leading me. That is word is true that he will turn around what was meant for evil into good. The believing can be easy sometimes, but the action usually is a little more difficult in that I sometimes don’t want to do what I know is right. It also gives the hope that this can be accomplished when there was none before. Whether you believe in God or not, it is the action part that I’m going to really be talking about.

Now that you have been warned, and are willing to continue, I will proceed. The very first thing you will need to do before any credit card amounts are touched is to make sure your personal budget is in place. Don’t tuck tail and turn on me just yet. Ok, I’ll deal with the chorus of I don’t have enough money to pay all my bills. I’m the “been there done that” lady. I have been a month or more behind on bills due to jobs not paying enough, not getting paid, getting laid off, getting fired, just breaking even on Ebay, and etc.


Don’t Have Enough Money

If you are truly behind on your bills due to circumstances beyond your control, forget your credit cards. Concentrate on what is important. If you need to go bankrupt, then you will need to look into that. There is a possibility that you could just forget them, because you have nothing they can go after. Just remember they may be able to garnish your wages. In the past I have done that, and none of them have gone after me, but they did threaten to. I had nothing for them to go after, my family was on government assistance, and I could not even afford to hire an attorney to go bankrupt. I had no investments, rented, and owned one jalopy of a car. Here is some information about not paying your credit card companies. Be very careful if you do this.

How To Legally NOT PAY Your Credit Cards Without Bankruptcy

This is for people in survival mode. From my experience, your most important bill is your rent/mortgage. The second most important is your food. The third is paying your water bill. The forth is having money to get to work whether you buy gas or a bus ticket. Then you need to worry about the rest of your utility bills and every day necessities such as toilet paper and laundry soap. Everything else you can get rid of. TV and eating out are not necessities. There is an exception of a cell phone, since with some jobs it comes close to being a necessity such as being a security officer or truck driver.


For those of you not in survival mode, you really need to make a budget. Without one you will be stuck wondering where your money went, how you are going to pay the next bill that comes in the mail, and unsure of how much you will need to get to through the rest of the month. Yes, you will need to sit down and write down all of your bills, how much they are, how much you need in every day necessities, and how much income you are bringing in.

Budget Planner How to Create a Basic Personal Budget that shows a simple break down where you are spending your money

Ok, you now should either have your budget in place which includes all of your credit card bills, or started to create one. Both are good as long as you have more income than expenses. Wait a second, I hear some saying. I can create a budget that works as long as I don’t have to put in all of my credit card minimum payments in. In that case, here is a good hub to look into.

What Should I Do if I Can't Pay My Credit Card Bill this Month?

But, I can't even pay my regular bills let alone my credit card bills. The budget just doesn't cover it. I don't have anything to sell. I can't come up with the extra money. I'm too poor. I can't even afford bankruptcy. I'm behind on my utility bills because I have been trying to keep up with my credit card payments. I'm scared of what they will do. Don't be. After reading the hub, because you may be scared to try this, read the comments below of people who have already done what the article suggests. Really, at this point in time, you don't have anything to loose.

Can't Pay Credit Card Bills? I can HELP!

For those of you who are not in survival mode, and have your income at least matching your expenses, now you really need to take a good, hard, long look at where your money is going. You want to get rid of your credit card debt, right? Now is the time to see where you can carve out extra money to put towards your debt. Yep, this is one of those ouch times. No, it won’t be the last.

Granted everyone is different. Some may be able to take out or majorly scale back on eating and ordering out, going on vacations, getting the morning coffee’s, going to the movies, renting movies, going on shopping sprees, and etc. It is usually going to be one or more of the things you think you need in order to reduce stress and make it through life. You are going to have to decide which is more important a little stress now or major stress later on. Oops, I meant to say a little stress reduction now, or major stress reduction later on.

Hmmm, that doesn’t seem to be coming out clear. It is about as clear as wondering why you bought an item on your credit and are now paying at least 3 times what it is worth if you ever get it paid off. I guess what I was trying to say is your morning coffee may calm your nerves temporarily for an hour or so, but reducing/eliminating your debt is going to take a great weight and a ton of stress off of your shoulders over the long term. Get this, once all your credit card debt is gone, all that money that was going towards your cards is now free money you can use guilt free.

Sounds good right? Here is the catch, while you are reducing your credit card debt; you have to stick to the budget. Yes, you have to pay for everything in cash or with your debit card that withdraws the money straight out of your bank account. No, you can not use your credit cards during this time period. If you can’t accept that, then what you are about to do is going to be basically worthless. You can not reduce your credit card debt while you are still using it. It is like trying to dry up a large puddle kids like to jump in while it is still raining.

It will not work period. I tried. Using your credit card while trying to reduce your debt at the same time is like the kid jumping in the puddle when it is raining. Actually it is worse. That puddle will take longer to fill, than it will for your debt to increase more than what it was before you started trying to reduce it. Your debt will sky rocket above and beyond what you are paying down. You have to see in your budget that using cash only  will work, and you will have to believe your budget will work. You have to have willingness for it to work with out the aid of any credit cards. It might be taking a step back in time for some of you. It is well worth it. It was worth it to me to know I can pay for everything without having to have a credit card as a life line. If you really need a life line, it should be your savings, family or a loan shark.


How you see your credit cards

Before you may have seen your credit cards as friends and even as a necessity, but starting right now you should start to think of your credit card as worse than a loan shark. The credit card will tear you up mentally and emotionally when you can’t pay. They add exorbitant interest rates that increase the product you just bought by a factor of 3 if not 10. Do you really want to pay $1000 for that $100 item because of interest and fees?

They have extraneous fees from late fees to annual fees. Then they will do everything sneaky to add little fees here and there that you won’t know about unless you read the fine print with a magnifying glass. Then they will harass you as often as they can, even going beyond what is allowed legally. If they could garnish your wages, they would. If they could sue you, they would. I have had them make every threat under the sun to trying to make me feel extremely guilty. The only thing different about a credit card and a loan shark, is that the credit card companies don’t come after you physically. I’m sure they would if they could.

Sometimes it helps by thinking in terms of how many hours of my life do I have to spend working at my job in order to buy something? If an item cost $100 and say you get paid $10 an hour, you have to use ten hours of your life in order to get that product. If you are thinking of using your credit card start asking how many hours would I have had to work to initially buy the item? Now how many more hours will I have to work just to pay the interest and fees? Is it worth my time and effort to pay the extraneous interest and fees?

Right now you have to make that determination that you are not going to use any of your cards. Freeze them in ice if you have to. Better yet cut them up. Look at your budget, and say I can do this. Now let’s get to it.


Reducing Your Credit Card Debt

Good, you got this far. Now take a deep breath in and let it out. You already went through the hard part of making a determined decision to do reduce and/or eliminate your credit card debt, and making a budget if you didn’t have one already.

You gouged out some of your niceties to gain some free money. What? Wait, you couldn’t find anything to knock out? You don’t go out, eat out, get coffee, subscribe to a gaming site, or netflix? You say you don’t have anything else to reduce? Do you have cable? I hate to say this, but you don’t really need it. Yes it is a sacrifice, and yes it is one that I made at one point in time. It is not going to kill you. If you don’t have TV, but have the net, you may have to sacrifice the internet. AHHH!!! I can hear many feet running away right now.

For those of you still left, the point is that you don’t really need these things. I know you want them, but you can live without them.

Ok, Deep Breath again. Let’s say you finally found something to carve out anything from $10 to $100 or more. I’ll go along with a medium of $50 for demonstrations sake. Remember even $10 extra dollars is helpful even though the more extra money you can come up with will reduce your credit card debt faster.

Now go collect all of your credit card bills. I know you don’t want to see them or even deal with them. It will be ok. There is a light at the end of the tunnel. After you collect all your bills, write down each bill, the total amount owed, and the interest you are paying on each. It should look something like this. I’m keeping the numbers even to make it simple.


Card: Owed: Interest Rate

Master Card $15,000 12%

Visa $10,000 15%

Discover $5,000 10%

American Express $2,000 11%

Master Card $1000 6%

Master Card $500 14%

Visa $500 10%

It doesn’t have to be in any order, but I think the most helpful order is from the largest amount to the smallest amount. Before heading on, the main thing is to keep paying the minimum on all of your credit cards, and to add the extra $50 to only one card. Logically thinking the $50 would be added to the highest interest rate card. Then when that card is paid off, you take the minimum payment plus the $50 and add it to the next highest rate interest card. You keep doing that until all the cards are paid off.

Some may be fine with that. Others may be bulking at the very idea by thinking it will take way too long to pay off. Even though they have every intention to follow through, they will more than likely falter. If you are one of those people who need to see results fairly quickly, then start with the lowest amount instead of the highest interest rate.

With the list above you would have a $500 Visa and a $500 Master Card. They are in tie for the lowest place. Now you should make the decision on the interest rate. The 14% interest sucks out more money from your pocket than the 10% does, so go ahead and apply the extra $50 to the $500 Master Card at 14%.

Lets say you were paying $35 minimum payment on the card. It would have taken you 500/35 = 14.28 months or 15 months to pay off. I’m not good with calculating interest that is going to incur during those months. That does mean it would even take longer to pay off as more interest is added. Now you added $50 to the $35 to get the new payment of $85. Instead 15 months, it will now be 500/85 = 5.88 months, or 6 months to pay off. That is a 9 month difference, and nine less months of interest being created. Happy thoughts in 6 months that credit card will be totally and completely paid off.

Wait one second, what are you thinking? Are you really going to charge up the card again? If you do, you just wasted all of your time and efforts. What would be best right now is to get completely rid of it. Yes, you heard me right cancel this card, especially if your lowest card has the highest interest rates, or annual fees. You have others. No!!!! WAIT, you can’t put the $85 in your entertainment expenses. Do you want to get out of debt quickly or not? Take a deep breath. Ready to continue?

Ok, Take the $85 and add it to your minimum payment to the $500 Visa with 10%. It will take even less time to pay this one off. Assume the minimum payment of the Visa was $35 also. Now you have $85 + $35 = $120 to apply to the Visa. Like the $500 Master Card, it would have taken 14 months, or a little over a year to pay it off without any extra payment added to it. With a $120 payment, it will take only 500/120 = 4.16 or 5 months to totally pay off. Once you have that one paid off, you should give your self a nice pat on the back for eliminating two credit card debts you had. You should get rid of this one also.

You can keep doing this until all the credit cards are paid off. The $120 would be added on to the next card you are going to pay off. We do have an interesting situation with the next lowest bill though. It is only 6%, which is the lowest interest rate in the list. After you paid off this card, take a look to see if your transfer interest rate is the same or lower than the rest of the cards. Also check to see if there are any transfer fees. If you have no transfer fees and your interest rate is still lower than the others, you could transfer $1000 from your highest rate card to this one.

This way you can keep focused on eliminating a small amount instead of the larger amounts, which can still seem overwhelming even with a larger payments to put towards them. By hitting the highest interest rate card, you will be saving more money in the long run through not having to pay the extra interest.

If you choose to do this, remember as you reduce the amount on the high interest rate card, your minimum payment will go down also. Here you have two choices. First is if the minimum payment was $150, keep paying the $150 even tough it was reduced to say $140. Secondly you can make the new minimum payment of $140, but apply the $10 towards the $1000 credit card bill. Whatever you do, don’t take it out of the credit card portion of the budget.

The Aftermath

Hopefully you have not used your credit cards at all while doing this. Otherwise you are wasting your time, energy, and money. Transferring money from one card to another doesn’t count as long as it makes sense, helps reduce the amount you owe, and helps to keep you on track.

I want to ask you what you are going to do afterward. Say you got rid of all your credit card debt that took you a good long time getting rid of. What are you going to do with those cards? If you are going to keep them, then you are going to be right back to where you are before you started, and nothing is going to be accomplished.

I hoping by this time you have been able to live on your budget, or should I say within your means. Ok, to break it down further, you are not spending more than you make. If you have been, I hope you have also realized you are living without your credit cards. Impressive, huh? Wait a second; I can live without having to use a single credit card? Yes, you can. I have been for quite some time now. Take a deep breath, because another ouch time is coming up.

Don’t cringe on me now. Take a deep breath, and cancel all of your cards. What all of them? But, but, but… But what? Do you really need them? Granted if you travel a lot you may need one to book hotels easily and rent cars. That is only one. Yes 1 and only 1. That one should be the lowest amount with the lowest interest. Hopefully by now you should have the ability to live without them.

How much money were you feeding the credit card beast - $100, $200, $300, $400 or more a month? That is how much free money you have now. Yes you can go spend it now, and not have to worry about increasing debt. I suggest taking the money and go blow it on your self the first month. Yea.

After the first month, you should seriously think about putting it in a savings account. Let this grow to at least six months worth of income. I know that will take some time, but it will also give you more of a worry free mind when you know that extra money is there incase of an emergency. After that, you can look into various investments, retirement account, or what ever else you need. Ok, I think I just heard the question, what about having some fun? Maybe you do need some fun or a very nice vacation for once. You will have to make that decision. You could put it all towards a vacation, or just a part of it. I do suggest you wait until after you build up six months worth of income, and at the very minimum the net, after taxes, amount you usually bring in.

Also, before you start building up your six month fund, you may want to think about stashing away $500 in cash somewhere in your home where it is hard to get to. This should only be used for true emergencies such as needing to replace the stove, washer, the car needs emergency repairs, and etc. You could even up the amount to $1000, since prices seem to keep going up. The six month fund could help if the emergency is over the available cash, but the six month stash is in case anything happens to your current income. You may not be able to get unemployment, or if you do you can supplement your unemployment with that fund.

I’m serious about $500 emergency cash on hand being hard to get to. If you have it somewhere like in a cookie jar that is really never used, then it really is nothing to just reach in and grab it. I need it for the car registration, library fee, the parking ticket, and the list can go on and on and on. That should hopefully be budgeted. Yes, you can put a miscellaneous category in your budget of $50 to $100 for the unexpected.

By hard to get, I mean something like putting it in an envelope, and seal it. Then tape it so well with the strongest tape you have preferably packing tape to make it really hard to open. In matter of fact you could even build up the tape so you have a couple of layers of just tape before you even can get to the envelope. Then you need to hide it somewhere where you have to get a step stool to reach. It could be in the corner of the cabinet or closet behind all the stuff you have stuffed in there. You know the one that you always avoid. What about in the closet with a drop ceiling? Lift the drop ceiling, and place your envelope right above that panel. You could put it in a home safe, as long as you tend not to go in it very often. You could put it somewhere very special such as behind the picture of your spouse or children. It would need to be between the picture and the back of the frame. I think you get the idea now.

What do you want to accomplish?

See results

Why not keep it in the bank with the six month fund? If you really want to you could keep $500 in the bank and $500 in cash. A lot of it has to do with physiology. There is something about knowing you have that cash on hand if you ever really need it. You know it is there, and you know you can get to it. You don’t have to worry the repair man not taking credit cards or checks. You don’t have to worry about how much is in the bank, or if you can make that one last transaction from your savings account without going over the transaction limit. I hate the over the limit transaction fees with the warning that if it happens again they will turn it into a regular checking account.

With the emergency funds built up, you can either concentrate on reducing your other debt such as school loans or medical bills, your retirement account, saving for something special you always wanted, investing, or spending it on yourself.

Above all congratulate yourself on getting rid of all of your credit card debt. Know you are not a credit card slave any more. You are free from the credit card bondage. Remember you never want to go back there again.


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    • jessemcduffee profile image


      7 years ago

      Hi, there is some very useful information here that I hadn't found elsewhere (Happy you posted in the forum). I agree that it's important to have cash on hand when needed, sadly I seem to always spend it : (. Anyway, you have a good style of writing and I'm going to subscribe.


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