Seven Steps to Exploding Your Credit Card Debt into Tiny Pieces of Nothing

Written by A Guest Speaker on May 21st, 2008

Seven Steps to Exploding Your Credit Card Debt into Tiny Pieces of Nothing
Written by James Hobbs

With all the clamor and noise over debt reduction and credit card debt from the credit counselors, debt consolidation companies, the lawyers who will help you (for a fee, no doubt) and bankruptcy court (for the real basket cases) you would think that managing a household budget requires an MBA, or at least your own personal ATM.

Well, Jim Dandee is here to tell you that just ain’t so. You can get out of debt on your own, and it doesn’t take going into more debt to do it. Even if you believe there is no way possible to squeeze one more drop out of your budget, get the wringer out anyway, we’ll be squeezing in places you may not have thought of before.

OK, here we go:

1) Stop charging new debt! Sir, Madam, step away from the credit card! And put your writing hand in your pocket for a while—no more new loans! None!

2) Create a budget (or a spending plan, if you prefer). You have to know where your money is going! Every penny counts! Don’t believe me? Maybe that’s why you’re here in the first place—because of not heeding sound financial advice… (insert cow-pie eating grin here). If you don’t know where your money goes, how do you expect to control it? People tell me I’m a blunt kinda guy (people tell me other things, too, but that’s another topic), but it’s only because I care (plus it’s kind of fun being a blunt kinda guy…). If you are not sure where the money is leaking out of your wallet, write down all of your expenses for a month, then make your “spending plan” (budget).

3) Cut out the crap! Clean up your budget, for real! I mean, are all those stops at 7-11 everyday really necessary? And if you really think you have to have that Starbucks Mocha Latte every morning, take a look at your backside in the mirror one time—seriously, small things must be sacrificed to get the big things. Consider this: why do you suppose such a large portion of our convenience stores and motels are being bought up by Indians and Arabs? Because they know how to sacrifice! What Americans know is how to spend all kinds of money in convenience stores and on vacations in motels! Stop it! Put that money away to pay down your credit card debts!

4) Do you have more than one credit card? You have to decide which one needs to be paid off first. Ideally, you should pay off the one with the highest interest rate first, but some people are more easily motivated by taking the smaller bites first. If that’s you, start by first paying off your smaller balances. Remember though, that high interest rate isn’t getting any lower, and it’s costing you more everyday… Shhh, what’s that sound? That’s the sound of money leaking out of your wallet from that high interest rate your paying…

5) Speaking of high interest rates, a study done by the Massachusetts Public Interest Group shows that 56% of credit card customers are successful in getting there interest rates reduced by simply calling the credit card company or bank and asking. It may take a little whining, cajoling, or talking to the supervisor, but it can be done in many cases.

6) Pay the minimum payment each month on all your debts except your number one priority from step 5. Put all that “extra” money you found in Steps 2 & 3 towards that top priority debt. Under no circumstances make only the minimum payment toward your designated priority debt, or you will not get it paid off in this or your grandchildren’s lifetime. Diligently use all that “extra” money for this debt.

7) Shampoo, Rinse, Repeat. As soon as you get one card paid off, repeat the process on the next one. At this point, you should be getting pretty good at it. Keep going until all your debts are paid in full.

This isn’t quantum physics, folks. It’s easier than you may think, but you have to get real! Be creative! Sacrifice the small things… bigger things are on the horizon—

jdBoone is a web consultant, marketing strategerist, grant writer and all-round white hat guy for The Center of Hope, Inc. alternative rehabilitation program in Clearwater, Florida. His latest launch can be found at http://www.witnesswear4christ.com