by Carlo Rossini

Created on: September 28, 2010   Last Updated: September 29, 2010

How to eliminate credit card debt

If you are reading this, because you researching the best ways to eliminate credit card debt, I strongly urge you to read on. As someone who has learned from financial errors and cleared over $30,000 of debt in just a few years I feel adequately qualified to be able to share, and offer invaluable experience.

As with any debt, the first step to eliminating credit card debt, is making sure you understand the full extent of not only what you owe, but how much you are actually spending daily.

In other words you need to create a full household budget. The important part of this, is that the credit card debt might not just be a consequence of an occasional 'over stretching' of your finances, it could be because of an underlying symptom of continually living beyond your means, which requires a very different drastic remedy, than simply a debt reduction plan.

Initial Phase; Budget and Review

So the first piece of advice is that you need to sit down with all your bank statements, account details, and receipts, and ascertain the total household spend, and deduct this from your net household income, and formulate a full budget. In particular note each credit card debt individually and list the payable interest rate (more on this later). This will give you some idea of how good or bad things are, and importantly how much you actually owe, and if you have any spare capacity each month. Chances are during this budget creation phase, you probably have identified areas where you can make savings.  It is funny how small daily spends do snowball into seemingly large amounts of money when added up over the month.

The next important step, is to physically (and emotionally) remove the credit cards out of your spend cycle if possible. If it means locking the credit cards away, or even taking scissors to them, then do it. It is however critical, neigh essential, to any credit card reduction plan that you do cease spending on them and further increasing your debt problems. Incidentally I would not recommend cancelling the cards once paid, as keeping the cards active (to an extent) is actually very beneficial to your credit rating, and can allow you to obtain cheap credit in the future.

Secondary Phase;  Formulate Debt Reduction Plan

Now that you know the scale of the task ahead, there are several steps you can take to assist your plans. And different strategies to employ, the first two steps remain the same though.

1. Maximize your income;

• 1
• 2
• Next Page >>