Consumer debt is through the roof right now. Americans have more credit card debt than ever and are having a hard time paying it off. With lowering home values and skyrocketing foreclosure rates, many people are struggling to keep their homes and maintain a good credit record. More and more, we have become a culture of debt.
What are you tips for paying off credit card debt? Please post them below.
I learned from a class that I took called "Financial Peace," written by Dave Ramsey. His website is www.daveramsey.com We learned how to do the payoff each by the "snowball." (02/26/2008)
Quite simply, don't carry your credit card in your wallet. That way you won't be tempted to buy something you really can not afford.
Also, when you do use your credit card, if it's not a purchase you can pay off in one billing cycle. Set up a personal plan to pay it off as soon as possible. Budget, budget and budget. (02/26/2008)
I use this payment method with my clients:
Write down the balance you owe on each credit card, next to that write down the minimum payment the credit card company wants you to pay each month. Then divide the balance by the minimum payment and write this next to the minimum payment. Pay off the lower number first with whatever you can afford AND continue making the minimum payment(s) on the other credit cards. When the 1st card is paid off move to the next card and pay the minimum amount PLUS the payment you've made on the 1st card. Do this on all the credit cards until they are paid off. AND DO NOT charge anything unless it's truly an emergency. (02/26/2008)
Don't run up credit card debt in the first place. It takes self-control to resist temptation in stores - marketers have spent their entire careers thinking up ways to make you "need" something that you really don't. An eye-opener for me was taking an elective class in marketing when in college. The ways the marketers add what they call "value" in the customer's eyes are infinite.
Look at the way cosmetics and jewelry items are displayed in a department store. They are very carefully lighted, and placed in display cases that you have to walk completely around to get to the other side of the store. Or analyze the marketing that goes into something as mundane as a vacuum cleaner or tube of toothpaste. Really LOOK at the ad - what is the message behind it? That if you buy this product you will be a better person? That your spouse will love you more if you buy this or that thing? How can a vacuum cleaner or toothpaste do that?
The background music in stores is selected for the customers they are trying to reach. Now they're experimenting with smells too. Or even the tool sections at Sears, Home Depot, Lowe's, etc. - look at the lighting and bright colors, all designed to make you want this or that product. EVERYTHING in that store is designed and intended to separate you from your money. If you walk into a store knowing that, you are forearmed. (02/26/2008)
If you have trouble balancing out the month, set aside cash equal to your credit purchase, and keep that up each day. At month's end, write the check, which your cash covers, and owe nothing. Why bother with credit cards, then? Why indeed. Well, you may like not having to carry the cash, though stores raising their prices 2-3% to compensate for card users seems a bit...unthrifty, nor much fun. (02/26/2008)
We had accumulated some credit card debt from school and major car repairs, and it seemed like even though we paid much more than the minimum on our card every month, we weren't making a dent in the balance.
So, we transferred all our debt to our other card that offered us 0% interest for 6 months. Beware of these, they do charge fees to transfer, but sometimes the fee is a savings over the many months of interest charges. We used a card we have had for many years and it has worked for us to do this.
Then, we locked our credit cards in our safe so they wouldn't be a temptation in our wallets. We haven't used them since. This is key! Don't charge ANYTHING else or you'll never get out of the debt hole.
I also found a part-time online job and ALL of the money I make from that is going to the debt. We made a schedule of how much we are paying off each month, and it shows how long it will take to get down to zero $. Seeing that schedule keeps us motivated! We want to see that $0 balance!
With all of those things combined, we are making a HUGE dent in the debt! It feels great! (02/26/2008)
Avoid buying anything that you can live without, and use only cash. Pay off credit cards with highest interest rate first. (02/26/2008)
This site is great; http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp (02/26/2008)
I learned a long time ago to just stay away from stores. I keep a shopping list at home, and I don't go to a store until it is filled or until I have a real emergency for something. Otherwise, I make do. I don't look through any catalogs that I get in the mail and I don't watch infomercials on TV. When I go to the store, I charge my purchases to get points on my credit card (money back) and I subtract that amount from my checkbook, so when the bill comes, I have the money to pay it in full each month.
I also save all my change and deposit it into a bank account so I have an emergency fund for those unforeseeable circumstances, and so we're not tempted to charge more. We also do odd jobs for some elderly neighbors (mow lawns, rake leaves, take their trash out, make minor home repairs, etc) and stash all that money in our emergency fund. A few dollars here and there add up fast. These simple measures have really helped keep us out of debt. (02/27/2008)
First of all, I use only cards that offer rewards. As soon as I make a purchase, I also make a payment, usually the full amount of what I have just bought. This way, the cards are making money for me, not the credit card company. If it is a store card, you can usually pay at the checkout at the same time, - other cards, I use online pay method. If it is a large purchase, I pay as much and as often as I can to avoid interest. (02/27/2008)
We paid off our credit card debt by taking out A Line of Credit on our house. The interest rate is lower. We never use credit cards now. And we are able to save on the side for our retirement, or emergencies. This is in Canada, I'm not sure what is available in the States. (02/27/2008)
I agree with the Financial Peace University class taught by Dave Ramsey. You can also listen to him on the radio for free. Go to his website and look up a station near you.
My husband and I just started his teachings and so far we have paid off 3 credit cards and are working on one more loan. It is a new way of thinking for my husband but it is working. Not only does Dave teach you how to pay off debt, but how to stay debt free and learn to save and invest. I highly recommend it. (02/27/2008)
By Guest from Michigan
I know this will sound mean, but try, try, TRY not to get any credit cards in the first place. Save your money up to buy what you want (by then you will know if you really want it). It is very hard these days to keep and budget money, but credit cards end up costing you twice or three times as much as the item you bought in the end. Plus, the way the contracts on credit cards are written now, they will always find something else to charge you for. Is a credit rating really worth all the money and frustration? Sometimes it is better to have no credit rating at all than a bad one. (03/02/2008)
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