This was an original post I did on credit card mistakes at ChristianPF.com.  I’ve adapted it a little for my site.

We all make mistakes, it’s in our nature. 

Sometimes we make them because we don’t know any better – other times we make them even though we do.

Most of us have made pretty big flubs with the plastic – I know I have - so it’s always good to get some helpful reminders on handling credit cards so we can avoid mistakes and eliminate credit card debt.

You can definitely get out of credit card debt completely by avoiding some of these credit card mistakes:

Not Realizing You Have Credit Card Problems

Okay, this sounds silly, how can you not recognize that you have credit card problems? 

Here’s how: 

I spent the majority of my college years and shortly after living the high life without any regard to the thousands of dollars I was racking up!

I spent the rest of the time out of college trying to eliminate my credit card debt!

I didn’t even realize that I had a credit card problem.  I just figured this was a normal part of existence and that once I made more money, then I would pay off that debt! 

No big deal right?

Little did I realize that I needed to make some drastic changes!  Get real with yourself and ask if you’ve got some spending issues.

Credit card debt help comes in the form of helping yourself first and realizing you have a problem and need to eliminate debt!

Not Paying Attention to Due Dates

This recently happened to me.  I got my email notification of the statement, logged it in the back of my mind that I needed to pay that bill and unfortunately got busy and never bothered to pull that statement out of the back of my mind until two days after the bill was due.  I plain forgot!

I know what you’re thinking – just automate your bill pay! 

Yes, I should do that, but I do like  to take a look at what’s on the statement and make sure everything’s correct.

This kind of forces me to do that. 

Making a late payment even if it is only by a few days can rack up ridiculous charges that only compound your debt. 

Those annoying charges can also have an impact on your credit scores. 

Being vigilant about paying your debt and paying it on time is key to eliminating your credit card debt.

Not Paying Your Bill in Full Each Month

This is where it all begins doesn’t it?  You’re a willing victim to the crazy cycle. 

You buy something you can’t afford and think, “I get paid in two weeks, I’ll just put it on the credit card and as soon as I get the bill I will pay it off” and then something else comes up. 

Emergencies happen or you find some other trinket you want to buy and you put that on your credit card too.  At the end of the of the month you receive a hefty bill. 

What do you do? 

If you only pay what you can and wind up leaving a balance on the card that accrues interest at insane amounts, you’re asking for trouble and perpetuating the cycle! 

Just think, with a little discipline and some self control you could’ve avoided unnecessary spending and used that money to open a Roth IRA or fund some other type of investment account.

If you want to eliminate your credit card debt, you must stop adding new charges and begin paying your bill in full each month.

Not Negotiating With Credit Card Companies

It puzzles me that more people don’t call their card companies to ask for credit card debt help.  

What I mean is that you can negotiate things like interest rates, late payment fees or even payment plans.  

If nothing else, it doesn’t hurt to give them a call and find out what they can do for you. 

The person who never asks, never receives.  Now of course there is no guarantee that the credit card company will do anything, but wouldn’t it be nice to know if they were willing to do something?  

Eliminating credit card debt is not easy, but don’t make it harder on yourself by making simple mistakes that can easily be avoided.

Other Tips?

Readers, what other tips would you offer to eliminate credit card debt?

Want to know how long it will take you to pay off your credit cards?  Check out my Credit Card Payoff Calculator!

Credit Card Payoff Calculator

Have you ever wondered what your credit card payoff would be? 

In other words, how long will it take at your current rate and payment to payoff credit card debt!?

Some of us probably don’t want to know because we don’t want to get depressed. 

But it’s actually a good idea to see what exactly you need to do to get rid of that credit card debt faster!

I stumbled upon a mortgage site that has a ton of calculators to use, so below you’ll find one that I thought might be helpful in calculating your credit card payoff.

Before you jump right in, consider these three reasons why you should calculate your credit card payoff:

To Get a Reality Check on Your Credit Card Debt

I remember back in college when I first started making credit card mistakes and racking up debt I had a relaxed attitude towards it.  It just wasn’t a big deal for me – that is until I started getting deeper and deeper in debt.

I needed a reality check on my current situation to understand the devastating affects of credit card debt!  Seeing how long it will take you to payoff credit card debt will give you that reality check!

To Motivate You to Payoff Your Credit Card Debt

Hopefully what that reality check will do is then motivate you to start getting rid of credit card debt faster!  Getting “gazelle-like-intensity” as Dave Ramsey likes to call it!

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To Help You Understand the Dangers of Credit Card Debt

Credit cards are wild beasts that need to be tamed!  Do you believe that?  They really are. 

If you’ve got a relaxed attitude about your credit cards and don’t really seem to care (like many people I talk to) you need a quick wake up call to see the dangers of credit card debt!

So go ahead, type in your situation in the Credit Card Payoff Calculator below and see what your credit card payoff really is!

What Is Your Credit Card Payoff?

Care to share your results with us below?  Let’s motivate each other to pay off those credit cards!!!

This economic recession has been a good thing for many people even though it’s been hard to go through.  Many folks are looking for ways to pay off credit card debt, become debt-free and start saving more, which is a great thing.

It can be a little overwhelming if you’ve been thinking about developing a plan to get out of credit card debt. 

It’s important to remember that eliminating credit card debt or getting out of debt period is always simple, but rarely – if ever – easy.

So, what should you do if you want to get on the path to debt freedom?  Take a look at these steps:

Take Inventory of Your Current Situation

Gather each credit card statement and write down the name of the card, the balance, interest rate, minimum payment due and the amount you are currently paying toward that debt.

If you’re married, this should be done with your spouse.  After all, managing your finances is a joint venture. 

You would be amazed at how many couples I come across that do not know that the other one has credit card debt or are unaware at how bad the problem is.

Stop Over-Spending

Most financial plans start with this piece of advice.  If there’s one thing you must do to get ahead financially it’s to spend less than you make or make more than you spend. 

I tend to focus on expenses first because it’s often easier to cut back than to make more money.  Making more money can be done, but requires a little more time and energy. 

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Call to Negotiate Your Credit Card Debt

I am amazed at how often this is overlooked. Many companies are willing to work with you if you approach them and let them know that you are wanting to pay off your debt, especially in this economy, where many people are not paying their bills at all. 

Depending on your history with them, you might be able to negotiate lower rates and better terms. 

I suggest calling your card company and be honest with them. I would ask for a manager right away or an account closing specialist so that you get straight to the decision-maker that can help you.

Let them know your situation and ask them if they can reduce the interest rate for you.

If they are unwilling to help you, get transferred to the account closing specialist and let them know that you will transfer the balance to another company if they cannot work with you.  

You should be prepared to have some balance transfer offers in hand to follow through on this and consolidate your credit card debt as well.

Snowball the Debt

Some people believe you should pay off your highest interest card first. I tend to disagree.

I think snowballing your debt is more of a confidence builder and can start some fast momentum towards getting you out of debt.

According to Dave Ramsey the best way to knock out debt is to get some quick wins under your belt because “personal finance is 20% head knowledge and 80% behavior!”

The first step in snowballing your debt is to pay minimum payments on all your credit cards except the one with the lowest balance.

You pay as much as you can on that amount until that debt is gone and then you take whatever that payment was and apply that towards the next smallest balance.

Each time you pay off a debt, apply that payment to the next smallest card and before you know it you will have created some great momentum and will see the progression at a more rapid pace.

Get Some Accountability

Getting out of credit card debt is not easy and it won’t happen over night. It will take discipline, sacrifice and patience, but the results will be worthwhile.

This is why you need to find someone who can keep you accountable for your goals.  Whether it be a financial coach, financial advisor, a friend or family member, a pastor at church – it doesn’t matter who so much as it does getting someone to do it.

They’ll encourage you when you want to give up and they’ll hold you to what you’ve committed to do.  

Thoughts?

What do you think of these tips?  Is there anything you’d suggest adding?

The new credit card rules that President Barack Obama came up with are supposed to eradicate many ill effects of credit cards that earlier created nuances in the life of debtors.

But the question is whether the new credit card information will be fruitful enough for those who are in college or below 21years old?

Glancing through the primary changes of the new law, you can be satisfied with the manner it deals with the earlier prevalent ill practices.

No doubt a change can be noted in the areas of rapid increase of interest rates on outstanding balances, the problem of double-cycle billing and carry-over balance billing.

And the good news is that there are changes in the provision for the college students too.

Although previously the rules were pretty flexible and you could have collected lines from banks or lenders at easy terms, now it will not be so.

The new regulation binds you in certain chains for your own benefit. Take a look at some of the new credit card information:

Lower Credit Limits

Earlier the credit cards that were available did not offer the students any special privileges of low interest. It was not given considering the paying ability of the student.

Thus you may end up with a huge loan which becomes almost impossible to pay back. What resulted was that you are under the clutches of debt before you leave college.

With the new law there is a restriction on your credit limit. If you are under the age of 21, you need to show a steady income source. You should also make sure to have the signature of a parent in your form.

Expense Limits

It is true that the loans are very helpful for the students to meet their regular expenses. But it has been observed that due to the imbalanced utilization of the resources they often get into debt problems. The rule will put a check on the students’ credit card expense level.

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Improved Credit Scores

Since these new rules will help lower your debt level, your credit score will improve. You can look forward to applying for a loan if you need to without any second thought.

The rule discourages students from having many credit cards open at one time, which leads you to multiple debts. If you have fewer credit cards, you will generally have a greater knowledge of your expenses. This can help you to reduce the amount of debt you carry and keep a check on it.

Finally, if you can manage to get some low interest credit cards after careful market research you can enjoy some extra benefits too.

At the primary level the new rules may seem to be too restricting and full of limitations.

According to many, it does not solve the problem altogether because it does not apply to the amount you have already spent. It may also have a negative approach as it may result in an increased dependency on payday lenders and pawnshops. However, if you follow the new rules it is definitely going to bring a change.

Being debt free after college, having a good credit score and balanced credit card behavior will yield a good result for a lifetime.  Your small initiative now may make you rich someday if are your prudent in your decisions. It is all about starting well at some point.

This has been a guest post by Nina Roberts - a financial content writer and blogger working with Oak View Law Group.

Times are tough!

Income is down, expenses are up and cash flow is tight.

It’s very tempting to skip out on a debt payment or a credit card bill to help free up the cash flow a bit, but are you sure you realize the impact that decision will have on your credit score?

The Spend on Life team had a great post and graphic the other day that showed how your credit score drops significantly the longer you go without making a payment – so make sure you are staying current with your bills!

In other words, Don’t Flush Your Credit Down the Drain!

SpendOnLife.com is an online resource dedicated to helping consumers achieve healthy credit.  Credit ratings are extremely important for qualifying for low interest rates on new loans and lines of credit.  

SpendOnLife.com provides you with up-to-date, accurate information and advice about credit reports and scoring.  Check ‘em out.

What Should You Do If You Can’t Pay Your Bills?

Every situation is different, but here are a few tips to help:

• Call your creditor – make them aware of your situation - many times they can work out a plan with you.
• Pay something – Even though you can’t pay the whole bill, paying anything shows the creditor you are committed to paying your debt.
• Seek help – There are some reputable places and agencies that can help you, just be careful. 
• Commit to getting out of debt – Yes it’s painful for a while, but in order to get out of this mess you have to stop spending. 

It is an epic battle, one waged since the dawn of time…well not quite that long, but the battle between credit card rewards and credit card debt is one which polarizes people the world over.

But today we end it with a duel – en guard!

The Strengths of Knight Reward

Knight Reward is often accused of being an underhanded competitor – offering the possibility of the carrot, only to beat you with his stick.

Well you can avoid being beaten and get a hold of the prized carrot if you know how to play to the strengths of credit card rewards.

How to use a credit card for the rewards:

A rewards credit card must be used with a high interest savings account fighting alongside.

Knight Rewards’ most famous battle cry is the fact that credit cards can be used throughout the month, during their interest free days, for all purchases while your salary is in a high interest savings account accruing interest, or is in an offset account linked to your home loan, offsetting the interest you will have to pay on your mortgage in the month.

To be given the chance to win, your credit card must be allowed to fight, and to combat the high annual fees which often come with rewards credit cards, you will need to be spending at least $2,000 each month on your credit card before you consider going in to battle alongside Knight Rewards, to accumulate enough points to make you eligible for rewards which will compensate you for these fees.

You must always clean your sword before returning it to its sheath.

If you fail to pay your rewards credit card balance back to zero before the end of the interest free period, even the fearless Knight Rewards won’t be able to save you – you’ll be ensconced in interest and monthly repayments which will override the value of any rewards you may earn.

However, using a credit card and paying it down to zero each month gives you a strong credit report and shows your financial responsibility.

Choose a rewards credit card which actually allows you to earn rewards.

Some rewards credit cards are drawing you into a battle you’re bound to lose with unrealistic terms, conditions and usage periods for your rewards points.

However, there are many credit cards which will offer you the chance to choose gift vouchers or fuel vouchers with the points you have built up in your spending and some gold cards will also allow you to earn two points for every one dollar you spend.

Know the rules of the credit card battle.

If your rewards points do expire, make sure you can easily keep track of them and cash them in for rewards before you lose them. Also make sure that the rewards you can earn are ones you actually want, and that you are given choices between charity donations or cookbooks, movie tickets or a hair straightener.

A savvy purchaser can deftly avoid interchange fees. Some rewards credit cards will attract a higher interchange fee, but most Australian retailers will advise you of this additional fee before processing the purchase – therefore, look for a credit card with a companion card which attracts lower interchange fees.

For example, take a Mastercard or Visa into battle with a companion American Express card, AmEx can earn you higher rewards, while fighting in a tag team with Mastercard or Visa to avoid high interchange fees. An informed credit card user also knows interchange fees are just one of the many costs of doing business.

He’s put up a good fight, but is it enough to allow Knight Rewards to maintain his dominance on the credit card battlefield?

The Strengths of Challenger Avoid

Challenger Avoid is a somewhat meek competitor – taking the road of least resistance in the battle and in risking nothing, he attracts no ire.

Challenger Avoid knows his weaknesses and if you’ve identified similar weaknesses then you may choose to fight alongside the stoic warrior Avoid.

Avoiding credit card battles:

The cost of not-so-innocent interchange fees is just too high.

Avoid is proud to fight the good fight on behalf of all consumers and holds strong to his belief that interchange fees which merchants are charged to accept credit cards are a cost passed onto all buyers, regardless of their payment method.

Challenger Avoid will avoid credit card use to save himself from the costs of interchange fees, while hoping the decreased use of credit cards will decrease the cost of interchange fees to businesses, and in turn customers.

The battle of the credit cards preys on the weak.

Challenger Avoid chooses not to fall victim to the seemingly enticing deals which he believes are only a clever disguise to get him deeper into debt, in turn earning the credit card companies more interest.

Challenger Avoid knows the credit card companies don’t ever want him to pay off his balance, and chooses not to spend an eternity being encouraged to spend.

Know Your Credit Card Habits

Knowing your spending habits helps you responsibly avoid bad debt. If you have faced past battles with credit card debt and lost, or you don’t want to tempt yourself to spend money which is not yours, Avoid encourages you to not show your weakness to the credit card companies.

If you don’t think you can pay off your credit card to zero each month, or only use it for essential purchases, then the best way to ensure you stay debt free is to avoid the temptation to use credit.

A doppelganger debit card can give you the same convenience as credit. If you have chosen to avoid credit card use, you don’t have to forge the ease and security of paying with plastic.

You can instead employ a decoy – a debit card which looks and acts just like a credit card, but which links to your transaction account and allows you to only spend your own money.

Debit cards offer you the security to pay for bills over the phone or make online purchases and can even offer rewards of their own – Visa Debit cards for example give you first access to concert ticket releases and discounts on audio entertainment equipment.

A worthy opponent, who has now earned himself an equal rank beside Knight Rewards, but has Knight Avoid been able to topple his historic foe?

The battle has been fought and won, with each side offering a mighty show of strength and determination for their cause, with the duel making champions of both competitors.

How About You?

The duel between Knight Rewards and Knight Avoid will go down in history, so which side will you be fighting on in the future?

Fred Schebesta write for Credit Card Finder and Savings Account Finder, where he helps people to compare savings accounts and credit cards

Financial difficulties like recessions, job layoffs or reduced salaries have a way of revealing how important it is to build a financial safety net. 

Having funds available for emergencies helps weather the inevitable storms of life and can get you through some difficult circumstances without incurring credit card debt.  

Here are some things to consider when establishing your emergency fund.

How much is enough?

Generally speaking, most financial advisors will recommend you have at least three to six months worth of expenses in a cash reserve. 

Depending on your situation you may want more.  For example, if you have a commission-only job and your income fluctuates or you have a seasonal job where your income is low for a few months out of the year it might be wise for you to establish a larger net.

How do I begin establishing a cash reserve? 

If you find your reserves are a little anemic, consider these steps to start the process:

1. Take inventory of your monthly expenses.  Multiply this number by your desired reserve (i.e. 3 months, 6 months etc)
2. Make a budget so you can begin to “trim the fat”.  Cutting back on unnecessary expenses will free up extra cash that can be saved into your reserve.
3. Get creative on making additional money.  Sell your old “junk” on ebay, or have a garage sale.  Use these proceeds to start building your emergency fund.  My wife and I have made some extra money these last few years by selling our old cell phones, clothes and more on ebay.
4. Save aggressively into a savings account.  There are many great accounts out there.  Bob at ChristianPF has a post on the 10 reasons why he loves ING.  If you like using local banks, I suggest calling around to find out who is offering the highest interest.  Otherwise if you are comfortable with online banking then check out bankrate.com.  They allow you to search the highest yields at banks both locally and nationally.
5. Don’t dip into your reserve unless absolutely necessary.  One of the biggest mistakes people make in setting up cash reserves is a false sense of now “having money to spend”.  Stay focused on the task at hand.  After you’ve built up your cash reserve feel free to reward yourself.  Just remember this money is for a safety net.

I built up my cash reserves – now what?

Once you’ve reached your goal for your cash reserve it’s time to get strategic about earning the most interest. 

I usually recommend a Three Tier Cash Reserve System to help keep the funds liquid and yet earn a higher rate of return. 

A three tier cash reserve basically utilizes a checking account, a money market and a short term CD Ladder. 

Tier 1

Tier 1 consists of your checking account.  It acts as your revolving door, meaning  funds come in and go out on a regular basis.  

Since most checking accounts pay nothing, you want to keep no more than one months worth of expenses here. 

Tier 2

A money market fund is designed to provide a safe place to invest short term liquid assets.  They typically generate a higher interest rate than a savings account. 

If you are using a three month reserve you’ll want to keep about a months worth of expenses here and about two to three months worth if using a six month reserve.

Tier 3

A short term CD Ladder is essentially a 12-month CD bought each quarter or four total.  Divide the remaining amount of your reserve by four and buy a 12-month CD.  In three months do the same thing and so on. 

If you fast forward one year from now, you will have a CD coming due every three months in case of a major emergency and need to access the funds.

Theses ladders can be structured in various ways.  For example, you could buy a 3, 6, 9, & 12-month CD all at once if your bank offers those terms.  You could also buy 12, 24, & 36-month CDs to ladder your funds.  I am a big fan of the 12-month CDs for two reasons:

1. They typically offer higher interest than the shorter term CDs
2. You don’t have to lock up your money for a longer time period.  Since this is a saftey net, you don’t want to be in a position where you are cashing out a longer-term CD early and incurring a penalty or forgoing interest.

Set Targets and Avoid Discouragment

Don’t be discouraged if you are not able to get your cash reserve set up like this yet.  The key is to stay focused on saving your money so that you can get your emergency fund where it needs to be. 

Set a target for yourself of when you’d like to achieve this goal and also set little goals along the way (i.e. saving your first $1,000, getting Tier 2 set up etc.). 

Be sure to reward yourself along the way when your goals are met so that you can stay motivated and positive. 

Saving for Emergencies or Paying Down Debt

Inevitably a question will come up from time to time about whether it is smarter to save into an emergency fund or pay down credit card debt? 

I like Dave Ramsey’s “Baby Steps” idea when faced with a question like this.  What he usually recommends is that you save $1,000 into an emergency fund first and then start paying down your debt. 

You can worry about building up your Three-Tier Cash Reserve once you have your debt wiped out.

Resources To Help

• Bankrate.com - compare interest rates on savings, money markets and CDs from banks across the nation.
• Dave Ramsey’s Baby Steps

 

Fix Your Credit Score By Applying These Tips!

With credit playing “hard to get” during this most recent economic downturn and lenders raising their standards for doling out cash, it’s more important than ever to boost your odds of getting a loan with a good credit score.  

Here are five tips to help fix your credit score and give you a greater chance of getting that cash you may need.

A. Annual Check Up

Getting an idea of what your credit score is has become so much easier now with government legislation that gives everyone the right to request one free credit report each year. 

I highly suggest visiting annualcreditreport.com to request your free copy.  Knowing where you are will help determine your next steps.

B. Be Punctual

This is so simple, yet it’s amazing that many folks think being a couple weeks late on their payment is no big deal as long as they are paying something. 

According to CNN Money, ”someone with an average credit rating of 707 can raise their score by as much as 20 points by paying all their bills on time for one month.” 

C. Clean Up Errors and Old Information

Check your report carefully to see if there is any outstanding information that shouldn’t be showing up. 

Perhaps an old doctor bill or credit card still shows a balance.  You’ll want to check for accurate credit limits from your card issuers as well. 

You can fix your credit score typically by taking care of these things with a phone call to one or more of the reporting agencies. 

Experian – 888-397-3742
TransUnion – 800-916-8800
Equifax – 800-685-1111

D. Don’t Close Old Accounts

This may seem counterintuitive, but closing old accounts will not fix your credit score it will generally hurt it.

This is because the reporting agencies want to see a nice long history of using credit.  According to Fool.com, “lenders take a hard look at the ratio between the balances on your revolving accounts and your total available credit. If you do have debt, try to keep it to less than 30% of your available credit.”  If you start closing your accounts, your debt-to-available-credit ratio goes up and impedes your score.

E. Eliminate Debt

As mentioned, lenders typically like to see a debt ratio of 30% or less. 

No debt would be ideal!  Get serious about improving your credit score by getting serious about eliminating debt, especially paying down those credit cards. 

Managing your debt responsibly will help boost your score tremendously.

 Breakdown of How Credit Scores Are Calculated:

Improving and fixing your credit score won’t happen over night, but with simple discipline and some practical steps you can start seeing improvement in a very short time.

Your debt may be costing you more than you realize especially if you are making these 5 mistakes.  Paying off your debt is a battle you can win by bypassing these blunders:

1. Not paying the bill in full each month

This is where it all begins.  You buy something you can’t afford and think to yourself, “I get paid in two weeks, I’ll just put it on the credit card and as soon as I get the bill I will pay it off” and then something else comes up.  Your brakes go out, your washer quits working  or you find some other trinket you want to buy and you put that on your credit card too.  At the end of the of the month you receive a hefty bill and only pay what you can and wind up leaving a balance on the card that accrues interest at insane amounts. Creating a budget will go a long way in helping to avoid this problem.

2. Only paying the minimum payment

If you are paying only minimum payments on your debt, your credit card companies love you and you should be getting Christmas cards from them each year.  Paying the minimum payment will basically ensure that it will take a lifetime to pay off your debt.  You must pay more than the minimum if you want to get anywhere with your bills.

3. Not paying attention to due dates

This is easy to do because we are busy people, but making a late payment even if it is only by a few days can rack up ridiculous charges that only compound your debt.  Those annoying charges can also have an impact on your credit report.  Being vigilant about paying your debt and paying it on time is key.

4. Not paying attention to the interest paid

If more people understood how much interest they are paying to their card companies each month in interest alone, perhaps they would make a greater effort in getting these debts paid off.  Matt Jabs at DebtFreeAdventure.com takes a revealing look at his own interest payments for the month and shows how interest destroys your ability to build wealth.

5. Not negotiating with the card companies

It puzzles me that more people don’t call their card companies to negotiate with them.  You can negotiate things like interest rates, late payment fees or even payment plans.  If nothing else, it doesn’t hurt to give them a call and find out what they can do for you.  Bob Lotich at ChristianPF.com tells about his experience in  negotiating with credit card companies. 

Getting out of debt isn’t easy, but don’t make it harder on yourself by making simple mistakes that can easily be avoided. 

Practical Advice to Pay Off Credit Card Debt

According to creditcards.com, the average American household credit card debt is surveyed to be at $8,329.

Even if you are not one of the average ones you probably know the devastating affects debt can have on you and your family.

If you are burdened by credit card debt and are serious about breaking free from the bondage that credit cards can put you under, then let me offer some practical steps to pay off credit card debt and begin your journey.

1. Pray About Your Situation

Prayer is an essential component for any aspect of our lives.

If you are in over your head in credit card debt, might I suggest humbling yourself and spending some quiet time alone with God to be honest with him about where you are at financially. He’s not going to be shocked by the news and He offers wisdom to those who ask for it (James 1:5).

2. Take Inventory of Your Credit Card Debt

Paying off your credit card debt requires that you gather each credit card statement and write down the name of the card, the balance, interest rate, minimum payment due and the amount you are currently paying toward that debt.

I would also suggest you write down the toll free number of the card company as this will come in handy later.

Taking inventory also means you look carefully at each card companies offers (i.e. balance transfer rates, 0% offers etc.) This will be important in step four.

If you are married this should be done with your spouse. You would be amazed at how many couples I come across that do not know that the other one has credit card debt or are unaware at how bad the problem is.

Typically one spouse is more of a spender than the other and so it can be quite a shock at first, but paying off debt is a team sport and must be fought together.

3. Stop Over-Spending So You Can Pay Off Credit Card Debt

This sounds pretty basic, but if you are in credit card debt you have been spending more than you earn.

You must be tenacious in reducing expenses and stopping your use of credit cards in order to fight this battle. Christian Personal Finance has a great post on where and how to cut expenses.

4. Negotiate Your Credit Card Debt With the Card Company

I am amazed at how often this is overlooked.

Many companies are willing to work with you if you approach them and let them know that you are wanting to pay off your debt, especially in this economy, where many people are not paying their bills or even filing for bankruptcy.

I suggest calling your card company and be honest with them. I would ask for a manager right away or an account closing specialist so that you get straight to the decision maker that can help you.

Let them know you want to pay down the debt and you’d like to know if they can reduce the interest rate for you. Find out if they have any special balance transfer rates and that you may be willing to consolidate some of the debt to them if they can give you a decent offer.

Also let them know that you are willing to transfer their balance to another company if they cannot work with you. Here is a helpful post about negotiating with credit card companies.

5. Consolidate to Pay Off Credit Card Debt

If possible, take advantage of special balance transfers offers.

This only works if you stop your over-spending. You don’t want to consolidate your debt and then rack up another couple thousand dollars on the card you just transferred.

You don’t want to get into the habit of doing this either because it can have some negative impacts on your credit score, however, if you consolidate some of the debt to a much lower interest rate then more of your payment will go towards paying off the principal.

6. Snowball Your Way to Paying Off Your Credit Card Debt

Some people believe you should pay off your highest interst card first. I tend to disagree. I think snowballing your debt is more of a confidence builder and can start the momentum towards getting you out of debt.

According to Dave Ramsey the best way to knock out debt is to get some quick wins under your belt.

” The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20% head knowledge and 80% behavior. You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.”

The first step in snowballing your debt is to pay minimum payments on all your credit cards except the one with the lowest balance.

You pay as much as you can on that amount until that debt is gone and then you take whatever that payment was and apply that towards the next smallest balance.

Each time you pay off a debt, apply that payment to the next smallest card and before you know it you will have created some great momentum and will see the progression at a more rapid pace.

Final Thoughts on Paying Off Credit Card Debt

Paying off credit card debt is not easy and it won’t happen over night. It will take discipline, sacrifice and patience, but the results will be worthwhile.

Find some friends to keep you accountable and do your best to keep plugging away. You’ll be glad you did.