How to Eliminate Credit Card Debt and Lower Your Monthly Bills

Unfortunately, too many American consumers find themselves buried under a mountain of credit card debt. Besides the obvious financial strain caused by this debt, credit card debt can leave a family with incredible amounts of stress and even ruin physical health. While every situation has its own challenges, there are some general principles you can follow to improve your finances and get out of debt.

Here are three simple ways you can start becoming debt-free and achieve financial freedom.

1. Identify the root cause and cut your spending

This may seem obvious at first, and you might want to dismiss us and look for a more sophisticated solution. However, you really need to be honest with yourself about how you got into this mess. There are some exceptions, but in most cases consumers with overwhelming credit card debt are simply spending more than they should.

We all have to learn to live within our means, as difficult as this may be. There’s nothing wrong with trying to increase our means, and you can certainly achieve this over time. For now however, you need to put aside your spending and leave your credit cards only for emergencies. You can use them for online purchases and other cases in which they are convenient or necessary, but make sure to pay this off at the end of each month.

2. Pay more than the minimum payment

By now, everyone should know that it is important to pay more than the minimum payment if you want to get out of debt during this lifetime! The numbers are simply staggering, and most of us have seen examples. Suffice it to say that if you pay the minimum payment on a large credit card balance it can take years (even decades) to pay off your debt. If you ever do pay it off, you will have paid much more in interest than your original purchase amount.

3, Increase your income whenever possible

You may not want to hear this, but it may be necessary to get a part-time job to supplement your income if you are really buried in debt. The good news is that you can quickly build some momentum and the debt will decrease much more quickly than you may have thought. You have to be disciplined, however, to use this extra cash to pay down the debt.

For example, you can start by paying off the card with the highest interest rate. After you pay this amount off, you can use all the cash that is left over and apply this to another credit card. This is known as a snowball method, and in time you will be paying larger and larger amounts on each successive credit card.

Be careful about using home-equity loans to get rid of your debt. If your situation is bad enough that you are considering taking out, say $50,000, to pay off your debt, you may need to consider other options like bankruptcy. There is no reason to put your house on the line for unsecured credit card debt which would be wiped out in bankruptcy. We’re not saying that bankruptcy doesn’t have any negative consequences, but we’re talking about keeping your house here!