Frugal Village- Frugal living community

When it comes to credit card debt it is easy come, hard to get rid of. It is estimated that the average American household has around $9,000 of credit card debt. Some estimates put the debt much higher. It has even been said that the average household has 10 credit cards.

It may seem right now as if there is no way out. You can no longer afford to pay the minimum payments. Perhaps your interest rates have shot up above 20%. They may even be closer to 30%. When you run a credit card repayment calculator, it tells you that it will take you over 100 years to pay back your credit card debt. Not a good feeling.

I've been there. I know how hopeless it can appear. But worrying won't pay the bills. It won't eliminate your debt. All you can do is start planning and take action.

Start by getting an idea of how much you really owe. Chances are that you really don't know. You try not to look at the balance on your statement. You forget immediately. You may not even have an idea of how much you have charged since your last statement came in. If you don't know exactly how much you owe, you need to sit down with a pencil and paper. This is where eliminating your debt really begins.

Grab your bills and make a list of every credit card you owe on. List the card, the interest rate, the amount owed and the current balance. Try to organize your list by starting with the highest interest rates and going down to the lowest interest rates.

Add up all of your balances. Now try to get over the shock. I hope that you decide right now to never again charge on your cards.

The best way to stop charging is to either cut your cards up or take them and put them in a safe deposit box at the bank. This method works for many people. You should have a safe deposit box anyway to hold your birth certificates, tax returns, social security cards and other private information.

Now you have to begin the difficult task of paying off your cards. Start by creating a budget. List all of your expenses, including housing, credit cards, utilities and every bill that comes in your door. Subtract the total from your monthly income. I hope you have some left over. Allot a certain amount to groceries, gas and other categories you spend in and then see how much you have left over to put towards your credit cards.

Chances are, you don't have anything left over. So you are going to have to look at where you can cut your costs. Believe me, it is worth any sacrifice you might have to make. See what you have that you can live without and work to cut your utilities and other bills.

You may even find that you have to sell a few things. For example, a boat or motorcycle is probably costing you money that could go towards your debt repayment.

Form a plan. Take it step by step and make it simple. Your plan could look like this:

 

1. Sell motorcycle and pay off loan. Use extra money towards first credit card. Put payment amount towards first credit card until paid off. Estimated time to pay off card -- 10 months.
2. Use Christmas bonus to start paying off second credit card. Put payment amount from first card and motorcycle to paying off the second credit card. Estimated time to pay off card -- 18 months.

And so on. The idea is that you need to know exactly what you are going to do. Put all of your extra money to your cards. 

You can save a little by calling your credit card companies and asking for a lowered interest rate. Now, if you have missed payments recently, you probably won't get a lowered rate. But they can tell you how long to wait before you call back. Then, make sure you call back.

If you haven't missed any payments, chances are that your rate can be lowered. It isn't a difficult task, you just might be on hold for a little while. It is worth it and can save you money and time off of your repayment.

The key really is to take the time to sit down and put things on paper. Write out exactly what you need to do to accomplish your goal. Add things up. See things in black and white. And take action. Getting rid of that debt is the best thing you can ever do. If you don't see it now, when you have no credit card bills to pay, you will see how great it really is.

Martin Lukac represents http://www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com and San Diego loan portal http://www.LendingSanDiego.com

photo by casey serin