There are basic steps to anyone wishing to eliminate credit card debt. The first step is a reality check. This consists of finding out exactly what you owe and to whom. Yes, you may have an idea that you have lots of debt, but you need to keep a list of who your creditors are, what is owed to them, and what interest rates they are charging you. This will be your guide to efficiently getting rid of that debt. So…get a pad and pencil and start listing each of your creditors. A creditor, by the way, is anyone to whom money is due. For purposes of debt reduction, a creditor is a business to whom you owe unsecured debt. Unsecured debt is debt such as on your credit cards. Credit card companies in the past looked at your credit history and deemed you capable of repaying debt to a certain limit. On that basis, they extended credit to you with no collateral.

Secured debt is different from credit card debt. With secured debt, you put up something of value in exchange for the money being loaned to you. Why bring this up? Because you need to be aware that if you default on a secured loan (i.e., cannot pay it back) you stand the risk of the creditor taking possession of the item you put up for the loan. This could be your car, some other property, or even your house. For this reason, it is extremely dangerous to take a loan associated with your home and use that loan to pay down credit card debt.

If for whatever reason you are not able to pay back the secured loan, you could loose your house. The better way to eliminate that credit card debt is to dig you heels in, cut expenses, and start the process of paying down that debt. So, back to the list of creditors. Make a list of creditors and for each one, list the amount owed and the interest rate they are charging you. In the case of credit cards, also list the amount of credit they have extended and how much room remains on each credit card.

With you list in hand, you can start the process of reducing debt the easy way - by looking for cards that have both a lower interest rate plus some room for additional charges. If you have any such cards, you can call those credit card companies and ask to transfer some debt from your higher interest rate cards to the lower interest rate cards. If you are able to do this, it will give you an immediate saving.

What to do with this saving? Next month, add the amount to your overall credit payments. Note how paying down credit card debt accelerates. Take the example of $1000 owed to a credit card company at an interest rate of 20%. That means that you will be paying about $200 per year just on interest and you will still owe the credit card company $1000. (The actual amount is a bit worse than this because of how the interest payments are calculated, but assume $200 per year just for discussion.) Now lets look at what happens when you pay down that $1000 debt. You are now saving $200/12 = $16.67 per month. Each $1000 paid off results in an additional $16.67 in you pocket each month. Now imagine if the amount is $10,000. Now you are starting to see significant money. At $10,000 paid off you have $166.67 per month extra (hopefully that you will use to increase you next payment).

Using this example, it is easy to see how the process of elimination of credit card debt accelerates over time. The more you pay down, the faster the debt disappears. The only requirement is for you to stay disciplined and committed to the process.

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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.

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Credit card debt can be eliminated for all but the most dire situations. I can make this claim based on the knowledge that credit card companies will simply stop issuing credit to those whose finances are beginning to spin out of control. They will discover this by observing the creditor’s falling credit rating. Of course, high debt coupled with job loss or unexpectedly large medical expenses can change a manageable situation to one that is out of control. Then, bankruptcy may be the only way out. But for the vast majority of creditors, this is not the case.

For most cases, the best method for eliminating credit card debt is the old fashion way - roll up your sleeves, trim your expenses, and get started paying down those credit card debts. Then, dig in you heels when the temptation to go over your budget comes up (which will happen something like 27 times a week!). But, by relentlessly making this commitment, the amount you can pay down your debt each month will grow ever larger. Your payments get larger since your balance is gradually reduced which results in lower interest charges each month. This means that what would have gone to the greedy banks can now be applied to pay down your debt.

One way to put yourself in further financial danger, however, is to put up your home or other essential property as collateral for a secured loan. Once you take out a home equity loan, you may get a more favorable interest rate – nothing wrong with that. But, it also puts your house at risk. Meaning…if you were to suddenly loose your job and cannot make those mortgage payments for an extended period, it is the financial institution’s right to seize the collateral on that loan. In this case the collateral is your home.

Unsecured as well as secured debt consolidation loans are generally available from lending institutions. These are intended to help you manage your credit card payments by combining all credit card debt into a single payment. Unsecured consolidation loans are generally available for those that are not too far in debt. To qualify for the unsecured loan, the borrower’s financial situation would have to suggest that the lender is not at high risk. So, if you are carrying a particularly high level of debt relative to your income, you will probably not qualify. In this case, you would have to look at a secured debt consolidation loan. In this case, you will put up something – such as your home – as collateral for the loan. Unfortunately, similar to the home equity loan, your will risk loosing your home if you cannot continue to make the loan payments.

Although the unsecured consolidation loan seems to be the way to go, if you have a very negative credit standing, your chances at obtaining such as loan are practically non-existent. Also, given the financial situation that is global in nature, do not expect any reputable lender to make such a loan.

One other situation to avoid…the “payday” loan. These are loans that allow you to access cash by putting up you next paycheck. Chances are you will not be able to pay back this loan on time. That’s when the added paid starts. These loans come with all sorts of interest rate clauses. Before you know it, you are paying back unbelievable amounts in interest. These make the greedy bank’s 29% credit card interest rates look attractive. Don’t use payday loans. Ever.

Hopefully, this has opened your eyes to a few pitfalls to avoid when getting your credit card debt under control. There is no magic. But if you are committed and diligent, you can eliminate that debt. See our other articles on this website to get ideas on how to eliminate credit card debt the right way.

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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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Here are some great, easy ways to save more money on everyday needs. What to do with the savings? Pay down those credit card debts at an ever faster rate. You simply cannot eliminate credit card debt fast enough – especially in today’s dangerously chaotic economy.

Let’s start with saving on insurance. Consider term life insurance as opposed to a savings and investment life policy. Consult a qualified financial adviser prior to making a change to any existing life insurance policy. However, be aware that term life insurance can save you money.

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On auto loans, be aware that many of these loans will allow you to refinance the loan. Depending on when the loan was originated, the currently prevailing rate could be lower. If so, investigate the possibility of a refinance. Note that your new loan will not exceed the current value of the car. So, if you purchased a new car with very little downpayment, there is the possibility that the loan will not cover the full amount of the previous loan. If not, consider whether it is more valuable to cover the difference out of pocket, or forego this option.

The cost of gasoline is up and down like a yo-yo these days. However, even if it is temporarily down, pay attention to a few things to reduce you gas expenses. For example, if you get a mailer for a tune up at a local garage, take advantage of the reduced price. The money you save on gas will often pay for the tune-up and more.

Also, watch your driving habits. Some people are making it a challenge to see just how much mileage they can get from their car. Make it your challenge as well. A few easy things to consider are to keep your tire pressure at the appropriate level (low tires = poor mileage), start and stop smoothly (frequent, aggressive starts and stops burn more fuel), and organize your life to make less trips (combine all of your Saturday errands into one trip to save on mileage).

On the home front, you can start with being energy conscience. Adding insulation is expensive, but it can pay off, depending on the amount you currently have and the cost of heating and cooling your home. Get some quotes on adding insulation and ask the contractor for an analysis of how much energy you can expect to save. Then, make the calculations based on your current utilities charges.

If more insulation is out of the question, you can still make a huge difference in your utilities costs by doing some simple work to improve the seal of the exterior doors and windows. Visit your neighborhood home and garden center and discuss some of the possibilities. Think of air leaks from your home the same as money leaks. Plugging these leaks gives you more cash each month to eliminate credit card debt even faster.

Don’t forget to check your air filter for your heating and air conditioning system on the proper schedule. A clogged filter means the blower motor works harder which translated into more cost to you. If you have rooms that are infrequently used, consider closing the door to those rooms and shutting off the vents. This will save you even more.

One last area to consider is groceries. The obvious way to start saving is to use coupons. However, keep in mind that many, if not most, of the coupons you see are for premium items – or, items that are convenience oriented. Convenience can be fine as it usually frees up time – time you can then use to earn more cash in your job or other endeavors. Otherwise, these are often items you just don’t need.

If you can manage your grocery use effectively, go with bulk purchase that Sam’s, Cosco, and similar warehouse stores are famous for. Just be sure that bulk items get used and are not partially discarded due to spoilage. Otherwise, you would be better off just sticking with standard sizes.

Lastly, be aware of how sneaky groceries really are. After all, they have marketing staff to use every trick imaginable. For example, more expensive brands are typically located chest high on the shelves. Cheaper generic brands will be either lower or higher on the shelves. Also, keep in mind the all too obvious trick of putting high margin, high priced items in the middle of the isles leaving it nearly impossible to get down the isles any more. So, don’t let them fool you into those high priced, low need products.

Hopefully, this has you thinking of many other ways to save on your weekly grocery budget. Be sure to salt away those savings to retire ever more credit card debt.

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To make the best of your cash available to pay down debt, you will focus on the credit card with the highest interest rate. But first - just to be clear - be sure you regularly make the required minimum payment on all of your credit cards. Don’t get in further trouble with lenders or possibly damage your credit score by missing a payment if you can possibly avoid it.

The basic, unavoidable method to achieve debt-free status, is to create extra cash to pay more than you have been accustomed to. This can be done by following the tips and guidelines in other articles to eliminate credit card debt featured on this website. Now…once you have extra cash in hand, you can start attacking that card which is charging you the most interest.

Putting all available cash into the card with the highest interest will save you the most money each month. This extra money is then added to what you are able to pay. You can see how the process escalates each month.

As an added strategy, keep shopping for extra credit cards. This may seem crazy given our goal of eliminating all credit card debt, but the real reason is to look for better “deals” on the credit you have until your debts are gone. For example, if you are paying 22% interest on a credit card, you may be able to get 14% interest on a new card. If so, use your new 14% card to pay as much as you can on the 22% card. This will save you 8% on that amount of money. Every little bit helps. Just make sure you don’t abuse this strategy and start running up new charges on that new card!

Monthly Budget Challenge

Each month, take another look at where your money has gone. Hopefully, you will get into the habit of tracking all expenses once you become dedicated to eliminating credit card debt. However, it is natural the first time through to allow yourself a few indulgences. Do you belong to a health club? Certainly, you want to stay fit. After all, you need that health commitment even more if you are struggling with debt.

But, take another look…often there is a YMCA or a city operated health facility in your area. These may not have all the gear and facilities as the health club. But, they certainly will supply you with enough of the basics for a motivated cost cutter to get by with.

You get the idea. Lawn service? Cut it. Cell phone bill out of control? Cut down on the extras. Maid service? Either cut it or cut back on the frequency. Many of these services lure you into more of their services that necessary by offering lower costs if you sign onto a monthly service. Do the math instead. If you can get by using that maid service every other month rather than weekly, you will keep you house under control and still save.

Again, just take a look at expenses each and every month. Make sure something unnecessary has not cropped onto the budget. Also, as you watch your credit card debt begin to shrink, you will be excited about the progress. This often will make giving up other items less painful than you may think.

Review where to attack your budget

Keep a perspective about where to attack your budget in the hunt for more savings. The typical family spends 32% of their income on housing, 17% on transportation, and 15% on food. That’s 64% of you monthly budget. So, don’t obsess on cutting out an occasion night out at the movies, when you could be cutting far more costs by car pooling or switching to public transportation.

Just as it makes the most sense to start attacking the credit card with the highest interest rate, it is also logic to look at your highest expenses if you want to make the fastest debt reduction progress.

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For some, just listing all of our creditors is a scary thought, much less paying them all back. Getting this list on a page or (even better) into a spreadsheet is intimidating because all too often the amount is more than you want to think it is. However, you should start your debt reduction strategy with a good dose of reality – no matter how painful.

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There is a barrier to break through here. It consists of making a transition out of the mindset that you have a manageable amount of debt that you will pay down “some day.” You need to instead substitute a disciplined knowledge of what your debt burden is and start the unavoidable task of paying it down. It is not likely that you will receive a huge inheritance, get lucking with an investment, or win the lottery. So, the healthiest strategy is to get started today with you list of debts and finding a little extra money each month to start the process. If you win the lottery, all the better.

Take this step today! Pay more on your credit cards than you charge for the next month. Then, next month you will clear this hardest of hurdles of getting started eliminating your credit card debt. The feeling you will get from actually reducing your debt over the next month will surprise you and give you some much needed momentum.

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Your fundamental strategy to eliminate credit card debt is to somehow, somewhere come up with a bit more money than the minimum payment due each month on your cards. If you don’t, you will likely never get those cards paid down. Making minimum payments, what little is paid down after the interest charges most likely will eventually disappear due to some unexpected expense.

The most common alternative to getting rid of that credit card debt is to save more by reducing your household budget. You should definitely pick out a few of the many tips and strategies for doing this and get started right away.

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Once you have implemented a budgeting strategy to get started, the next thing to consider is extra income. Sure, you will have to give up some personal time, but the effect of bringing in even a little extra income and using it to pay down debt will surprise you. That extra income is not only going to reduce you debt load on next month’s bills, it will save multiples in interest charges over the time you spend eliminating debt.

You can do this several ways, but the simplest is to start a simple side business. You can pick up books in any used bookstore full of low-risk businesses to start. These should be ones that take little or no capital to start. They can be as simple as house cleaning, doing household repairs, pet watching…you name it. Don’t go after some business that requires employees and lots of start-up expenses. Keep it simple, get more cash, and use that cash to reduce you debt. Then, take a little of the extra cash you are earning to treat yourself. You will deserve it!

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If you loan money to someone else, interest is your friend. Your money is working for you because the debtor is paying you interest. When you owe money – as is the case with credit card debt – interest is your enemy. Of course, there are circumstances when interest is necessary and good. But, that is generally related to business loans that allow the business to grow. The growth of the business through debt financing more than compensates for the interest paid on the loan.

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A consumer loan in the form of credit card debt is hard to justify because the interest you are charged each month is eating away at your money. This is money that you would otherwise have to make investments or, even if you didn’t save a dime, it is money could be spent to increase your standard of living.

Now…let’s say you get behind on your credit card payments. Unfortunately, the interest “meter” continues to run at all times. Not only does the balance of the debt not go down because of the missed payment, the balance actually increases. This is because interest continues to accumulate (is accrued) and is added to the amount of debt you owe. This new, higher amount will show up on your next statement.

No question, it is painful to reduce your expenses in order to pay down debt. But it is twice as painful to miss a payment because of the concept of accrued interest.

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