Debt has a number of advantages. It allows the purchase of a home over time, the acquisition of large-ticket items, such as cars, on a pay-as-you go basis and the convenience of credit cards. It also has the stellar disadvantage of high usage cost through interest rates and the tendency to allow a person to live above their means. Paying down debt takes time and effort but isn't complicated.
Renegotiate
It takes gumption to call your credit card companies and ask for the interest rate to be decreased. Talking with a customer service representative probably won't get you anywhere. Ask to talk with a supervisor. The downside is the credit card company could take a long look at your account and decide to lower your credit line. That impacts your credit score. One of the factors in determining credit scores is the amount of used credit as a percentage of the available credit. Lowering the credit line increases that percentage.
Highest Interest Rate First
Interest rates vary from 10 percent to nearly 30 percent on credit card balances. If the company refuses to lower the interest rate, pay the higher interest rate cards off first. For example if you have $250 available over and beyond the minimum payments due, put it all toward the highest interest rate card. When it's paid off, pay the $250 to the next highest card and so forth.
Reduce Living Expenses
Go over your expenses. Set a dollar amount goal for expense reduction. Start with the expenses you won't miss too much. Groceries are a major expense for many families. Change out frozen dinners for homemade, shop bargains and use coupons and you could save several hundred dollars a month.
Sell Assets
If you never use Aunt Matilda's sterling silver flat wear set, sell it. Use the proceeds to pay down your highest interest rate credit card first. Go through jewelry you own and do the same thing. Consider having a garage sale. Sell items on auction sites or classified ad sites. You'll end up with a less cluttered home and less debt as well.
After Credit Card Debt
Credit card debt isn't the only debt for most families. There may be personal loans, a car payment or two and a mortgage and second mortgage. When the credit card debt is paid off, don't stop there. Continue by paying off the car loans. Consider trading in that expensive car for a more economical model with a lower payment. If you divide your monthly house payment in half and pay it every two weeks, that results in an extra payment every year. Fifty-two weeks divided by two equals 26 half-payments or 13 whole payments in one year.
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