A few days before Christmas, I was doing some online banking and looking at our credit card statement, which threatened to Grinch-out my holidays. So I closed my laptop and promised myself that in the New Year, I would look at ways to pay off credit card debt.
There’s no secret way to accomplish this… You pay off debt by making more payments instead of the minimum (which we’re all guilty of). However, there are ways to pay off bills faster, and if you do your research first, you can hopefully accomplish this goal in 2012.
Experts agree that paying off your highest interest credit cards first is the way to go. If you only have one credit card, like me, this makes it easy since I know where to direct my efforts.
If you have several credit cards, it may be worth it to look into a debt consolidation service. This way you can pool all your payments into one large debt, instead of trying to figure out which one to put your focus on. Many times, you can get an interest rate that may be less than an inflated credit card rate.
So, once you’ve got your focus, it’s time to figure out how to get that debt paid off. I’ve learned in the past that I have to make a plan. I can’t just say, “Oh, I’ll pay an extra $20 here and there when I’m doing my online banking,” because it just doesn’t happen. I suggest making a commitment of a certain amount every pay day. This is over and above the minimum payment, so minimum payment plus new payment.
Second, if you can, pull your credit card out of your wallet so it’s not there for casual spending. My husband is bad for putting gas on the credit card because he’s not sure where we’re at for bills that week. I’m really bad for leaving my debit card in a jacket pocket and only having my credit card on me. I pay for my groceries with the credit card, make a mental note to pay it from my checking account when I get home, and then I’ll forget about it… Whoops!
Third, evaluate where you can trim your spending so that you can put even more onto that debt, above your pay day commitment. For us, I know we overspend on take-out and should be eating at home 7 nights a week. It’s just so easy to pick something up!
I’m by no means an expert – if I was I wouldn’t carry credit card debt myself! However, if I can listen to my own advice maybe we will all be a little further ahead at the end of 2012.
I was told by a friend, maybe take out a personal loan (repay by installments) to pay off the credit cards. The interest rate will be lower.
I got a tip years ago from my step-mother, an accountant, that has been extremely valuable to me.
Rule #1: Unless your are starving or in a dire emergency, do not use the credit cards for consumables like groceries and household items or small luxury purchases. Only use the card for larger, durable purchases. {The exception to this is gasoline, if you need to track gas spending and usage. If so, use a gas card or one dedicated only to that purpose. Do not put the snack or slurpee or cigarettes from the convenience store on the gas card–it’s only for the gasoline or other car related items.}
This means that almost everything you buy or go do is within your regular cash flow budget, leaving room on the cards for larger or special items.
Being more purposeful in finances is my goal for 2012. For me this involves actually tracking our spending and a GREAT tool is the computer program Quicken (I’m sure there are more that do the same thing). The thing I love about this is that I can sign onto my online banking and download all my transactions (instead of entering everything seperately like the good old days!!). I started Jan 1 and already have been AMAZED at where all our money goes!! We also took our credit cards out of our wallets. I hope to keep at it and create better awareness in where we are at and better spending habits 🙂 Good luck to you as well on the paying off debt 🙂
Congratulations!
I just gave you the Versatile Blogger Award! Love your blog.
http://mylittlehouseoftreasures.blogspot.com/2012/01/i.html
With the payment made on pay day (min +), you can also have a recurring weekly transfer/payment to your CC. The same payment every week makes it easier to stick to it and adds up over the month – instead of one lump payment.
We use our CC for almost everything (not groceries) and make sure we pay off in full every month. The interest we earn on our account is so much less than what we’re paying on our CC.
This is our goal as well. We’ve become house poor with a fixer-uppet, so the credit cards and credit lines have taken a huge beating. I’m hoping to tackle these this year to reduce some stress and get back on top of things. Thanks for the post