Home » Uncategorized » Strategies for Eliminating Credit Card Debt

Strategies for Eliminating Credit Card Debt

Do you have a debt hangover? The excitement of a new purchase can often cloud our financial best judgement. Financial professionals unanimously agree that taking on credit card debt for discretionary purchases is a financial move that is almost always regretted. Often times emergency medical bills and car problems can result in burdensome medical bills. Follow these proven strategies from the financial experts to pull yourself out of credit card debt and on a path towards a sound financial future.  If order for any goal to succeed, there must be a plan. The plan needs to include actionable steps to reach that goal. There is no better time than today to formulate your plan and put it into action. Take charge of your financial future today. Eliminating credit card debt and forgoing credit card purchases requires self-discipline and delayed gratification. Make a commitment to see your goal through. You’ll never regret taking these steps.

The first step is to define your budget. Make a spreadsheet of all of credit card debts, include balances and minimum payments. List the in descending order from smallest balance to largest. Total the balance and minimum monthly payments. In a separate column, list all of your fixed expenses. This should include your rent or mortgage payment, insurance, utilities, taxes, internet and phone service. Include any student loan payments and car payments in this column. Total the monthly payments. Identify your total net, take home pay each month. Subtract the sum of monthly fixed expenses and minimum credit card payments from your net take home pay. This figure is your monthly discretionary spending amount. Gas, food, dining out, gifts and shopping are all discretionary expenses. In other words, you have complete control of how these funds are spent. It is from these funds that you will define an amount, in the following steps, to earmark towards credit card debt reduction each month. A great way to help lower spending, is using coupons. Groupon Coupons has many great deals that will help cut down on your monthly expenses.

This might appear daunting at first glance. One of the ways to realize how the amounts spent on various discretionary items can add up to large sums, is to annualize them.  That designer coffee you enjoy every morning on the way to work along with lunches with coworkers can amount to over $3000 in a year. Keep that in mind. You must decide if short term gratification is more important or if your priority is to eliminate the stress associated with excess debt and endure the short term sacrifices that come with reaching your goal.

Start your elimination plan by paying off the credit card with the lowest balance first. Set a date by which you indent to accomplish this. Add the number of months between now and your target date. Divide the balance on the card by the number of months you’ve allowed to reach your goal. This is the amount you need to set aside from your discretionary spending each month to achieve your goal. Keep your eye on the process and the ultimate goal of being debt free and you can accomplish anything you set your mind to. You have a plan!