8 Steps To Reducing Credit Card Debt

Are you knee deep in credit card debt?  It may seem like there is no way to reduce your credit card debt and that you will be avoiding calls from credit card companies trying to collect debt until the end of time.  There is a way to reduce your credit card debt.  If you follow these 8 steps you will be on your way to a credit card debt free future before you know it.

1. Take Inventory

Before you make an elaborate plan on how to reduce your credit card debt, you need to understand your overall debt.  You may think that your debt is $11,000, but in reality it is $15,000.  Knowing exactly how much debt you are walking into will help you create a realistic plan to reduce your credit card debt.

2. Negotiate A New Rate Or Consider A Balance Transfer

The best way to save is by negotiating a lower interest rate with your lender.  If you’re able to shave a percentage point or two, you can save hundreds since you repay your debt.  There is no harm in making a simple phone call to you lender to try to reduce the interest.

Another strategy is to move your credit card balance to a new card that has a 0% introductory on balance transfers.  A lot of these cards offer a 0% interest rate from 12 – 21 months.  This will allow you to pay off your credit card debt faster.

3. Track Your Costs

Write down all the your financial commitments.  These include mortgage, car insurance, car payments, food and utilities to name a few.  Then write down all of your leisure expenses. These include entertainment, eating out and travel. This will help you track your costs and create a budget in step 4.

4. Create A Budget

It’s time to create a budget.  You will need to make some sacrifices; however, you do not have to live on water and bread. It’s hard to make drastic changes and usually making small changes can lead to large savings.  Make sure to give yourself a bit of wiggle room just in case unexpected costs come up.

5. Select Your Payoff Plan

There are two typical credit card payoff plans.  The first is to pay your extra income into the card with the highest balance while paying the minimum on the other cards. This is the fastest way to lower debt.  When the card is repaid, you should apply the same method to the card with the next highest debt.  This will create a snowball effect.

Another plan is to repay your card with the lowest balance while continuing to pay the minimums on your other cards.  Though this isn’t the method that will eliminate your debt, it is the quickest way to get rid of debt on a single card.  Also, it can feel good to see a card balance fully paid off.

6. Hide Your Plastic

Hide your credit cards in places that are not easily accessible.  This is because if you carry your credit cards around with you, the likely hood of buying something that you shouldn’t is higher. Whenever possible, pay cash.

7. Find Encouragement And Motivation

Have reachable goals to help you stay focused.  Have a goal of what you want to do once you are debt free. Maybe you want to go on a vacation or you want a new car.

It also helps to find a group of friends or a support forum to cheer you on in your journey towards paying off your debt. .

8. Watch Your Spending

You don’t have to worry constantly about your spending, but keep a watchful eye on your bills.  Make sure you are not overspending and that you are sticking to your budget.

You no longer have to live with credit card debt.  This is a great 8 step method to eliminate your credit card debt.  When you are debt fee, you will feel a sense of burden lifted off of your shoulders.