The Best Way to Get Rid of Credit Card Debt

It is not easy to get out of credit card debt, but it is well worth the effort in the long run. The best and only way to get rid of credit card debt is by making sacrifices, cutting back and being persistent. Dedicate yourself to getting rid of the debt. Once you are free from credit card debt, your credit score will improve, giving you more freedom to buy a house or car. You will also have more money each month since you no longer need to spend hundreds of dollars to pay credit card bills. Use the experience as inspiration to never get into credit card debt again.

Assess Debt and Budget

Take an honest assessment of your debt. Dig through all your credit card statements and bills or look up your accounts online. Next, establish a budget. Designate as much money as you possibly can afford to your debt each month. Stop using credit cards and start using only cash for necessary expenses.

Cut Spending

Cut your spending. Switch to a less expensive phone or cable plan, or cut those services altogether. Take steps to reduce electricity costs around your house. Search for cheaper car insurance or opt for public transportation to save money on gas and car costs. Avoid going out to dinner, spend less on groceries and take on free or low-cost hobbies to help pass the time you would normally spend eating or spending money.

Increase Income

If possible, add new income to your monthly budget. Look for a second job or ask for more hours at work. Try doing odd jobs around the neighborhood like mowing lawns, dog walking or babysitting. Try freelance work using any creative talents you have or hold a sale to sell some of your personal items you no longer want or need. Another option is to start your own small business on the side. Put all of your new income toward paying down your debt.

Start Saving

Prepare for the unexpected medical bills, car repairs or other surprise expenses. Establish a healthy financial cushion for these uncertainties so you do not need to use your credit card to cover them. Try to stash away $50 or $100 each month if you can, until you reach at least $1,000. It might be hard at first, especially if you are not used to saving, but the financial cushion will give you peace of mind against surprise expenses as well as develop good saving habits for the future.

Attack Debt

Tackle your debt with the money freed up by cutting expenses. Call each credit card company and ask if it is willing to lower your interest. Financial radio talk show host Dave Ramsey suggests paying off the smallest debt first, then using the money you were paying to the smaller debts toward paying off the larger debts. Another method is to pay down the cards in the order of highest interest rate to lowest. For motivation, make a list of all credit cards, including amounts owed, and update the list each month as you start to pay the debt down. After a few months, you will see progress, which can motivate you to keep working hard. If you have thousands of dollars worth of debt, it might take a few years, but with enough drive and dedication, anyone can be free of credit card debt.