Ultimately, eliminating credit card debt is a matter of: 1) stop charging to your credit cards and 2) pay them off - the quicker the better. To accelerate the process, you will need some extra cash beyond what you are typically able to pay on your credit cards. Note that once you get this going, it becomes self-sustaining. By that I mean that each amount you pay down increases the amount you can pay down next month. Why? You will free up an ever increasing amount of cash each month due to the fact that you will pay less in interest with each passing month. This can then be added to how much credit you are able to pay off each month until the process snowballs.
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To get you jump started, consider some of the following methods to free up extra cash to eliminate that credit card debt.
Review your communications and entertainment needs
Not that long ago, the typical family paid for a phone line (maybe a couple if there was a separate line for the teenage son or daughter). Then, add in basic cable service and that was it. Now look at us…cell phones with unlimited text messaging to every family member, cable/satellite TV with premium channels, security monitoring service, and high-speed internet. All told, easily $300 or more. Needless to say, this is one area to attack aggressively.
Frequently review each credit card with the issuing bank
Check the headlines; the banks are in real trouble these days. They have taken the hapless credit card holder for a ride with penalties and aggressively jacking up interest rates at the slightest excuse. So…no need to be easy on the banks. Call them frequently and ask politely, but firmly, for a better rate. If you have some room on another card, say that you were going to transfer the balance to another card, but that first you want to allow them the opportunity to give you a better rate. In exchange, you will leave the balance on their card. If they don’t bite on this month, try again next month. Nothing ventured, nothing gained.
Shop for insurance
In the past, I was reluctant to shop around for auto insurance. After all, the insurance agent that serves me worked hard to make sure I got all the applicable discounts when I last made a change. Unfortunately for him, I finally did a bit of shopping around. Boy was I surprised to find that I was overpaying by over $100 per month. Even more shocking was the fact that I am insuring three high-mileage vehicles (read junkers). If you are driving something a little less “modest,” you stand to save even more. (Note: If you are a homeowner, be sure to get a quote for homeowner’s insurance bundled with auto insurance. It will make a significant difference in price.)
Cash is king
Next time you need a high ticket item - a refrigerator, a mattress, or even a car - spend a few months saving the necessary cash. Then get ready to bargain with the salesperson. Especially in a down economy, you can expect some great deals. Why? Because the store owner, even if he gives you a significant discount, is benefited. For one thing, he reduces slow moving inventory. Secondly, he gets more cash in hand. Thirdly, he is saving by not paying the credit card companies to process your credit card. So…cash is king. Use this axiom to your advantage.
If you have not taken all of these actions lately, do so now. I am optimistic that you will find you can save hundreds of dollars per month if you work on this aggressively. This is hundreds of dollars a month to help you eliminate credit card debt. Once you achieve that, you can begin to build real wealth. Not some phony high-stress lifestyle that keeps you running on the treadmill.
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