Eliminating credit card debt is probably the single best “investment” the average person will ever make. What makes this such a great investment? The fact that you get an immediate, constant return on your investment. Let’s say you have a credit card with a balance of $10,000 and an interest rate of 15%. Making higher payments until you eliminate that credit card debt is the equivalent of putting around $125 per month in your pocket. This is money that would otherwise go to the greedy banker. Ask any seasoned investor, “How many investments they have made with a consistent 15% return year after year?” If they are honest, they will say, “None.”
To eliminate credit card debt, your first step is to find some extra cash to pay down more than the minimum due each month. If you only pay down the minimum required by your credit card issuer, it will take years - maybe decades - to pay those cards down. And, that assumes you don’t add more debt on that card that will cost you even more in interest. Taking this long to pay down the debt means paying an obscene amount of your hard earned cash as interest payments.
On the other hand, if you stop adding to the amount you owe on your credit cards, and pay down a little each month, your balance will, of course, gradually get smaller. That means that each month you pay a little less in interest. The money saved can then be added to your next month’s payment. By staying consistent with this strategy, you will see that the debt is eliminated at an increasing rate. It accelerates a little more each month.
Don’t think you can’t find many ways to come up with that cash. Some are easy; some are not. It depends on your situation and how serious you are about no longer being a slave to the banks. You can think of plenty of ways to reduce your monthly budget. You can also find money saving tips on this website and elsewhere.
Operate On Cash
Here’s a really simple tip to get started with eliminating credit card debt. To start down the road to eliminating credit card debt start - immediately - switch to a cash-only budget. For one thing, it is quite an eye opener to look at all of the $20, $50, even $100 bills that go flying out of your purse or wallet each week just to put food on the table and purchase other incidentals. It is one thing to just swipe a credit card – it tends to make your purchase “just” a number. It is quite another to start out on Monday with a healthy stack of greenbacks, and be sweating it out by the end of the week wondering if you will have enough cash even for a gallon of milk or to put gas in the car.
Even better is the effect on a family. Just keep showing the spouse and kids how much is left each day. They will appreciate the amount of money required to run a household. As a result, they will usually be much more open to helping trim down the budget.
Raise Some Cash to Get Started Today
There are so many ways to reduce your budget. The top marketers of every corporation work overtime to find ways to extract more money from you. However, after you work through your monthly budget and reduce those expenses, it is time to raise a little cash around the house.
Go through the attic and garage. These days, there is really no reason to have a cluttered garage. Sell things on e-bay. If you really don’t want to take the time for that, there are now businesses that will take quality stuff and sell if for you for a commission.
Take the money you accumulate with your garage-clearing to get you off to the best possible start on eliminating your credit card debt.