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Before tackling your debts, it’s a good idea to get the average interest rate on your balances to the lowest possible. If you are currently paying a high interest rate on your debt, consider moving your balances using one of the special offers below, and then tackling the remaining steps to eliminate your debt.
We used the following steps to get out of over $10,000 in credit card debt alone.
1. Take Inventory
Find Out Exactly How Much You Owe. Very few people deep in credit card debt know exactly how much they owe. That was our case, until we finally decided to sit down
I consolidated my credit card debt with SoFi.com, got a great interest rate, cut up my plastic and made those payments go further each month.
2. Picking a Plan – The Debt Snowball
There are plenty of debt reduction plans available. We chose the Debt Snowball model made popular by Dave Ramsey. Since then, we’ve learned of other similar plans, with slightly different goals.
3. Slash Your Monthly Spending to the Bare Essentials
Everything frivolous must go. Have a yard sale. List things on eBay. Cancel all the little luxury subscriptions like Netflix and XM Radio and the 356-channel cable service.
4. Increase Your Income
Reducing spending is important, but there is probably more opportunity on the opposite side of the debt reduction equation. Find ways to increase your income. Work part time. Start your own side business. Ask your boss if you can work overtime on a special project.
5. Pay it Off, Cut it Up
After paying off a credit card, resist the temptation from your newfound available credit. Cut up the card and move on. If you continue to use the card you just eliminated, you are only reserving a spot on the hamster wheel of debt.
6. When Back to Zero, Keep Up the Intensity
The natural tendency is to take your foot off the gas a little once you pay off your last credit card debt. However, now is not the time to get complacent. Chances are you have little in the way of savings and are one minor emergency from returning to debt.