Credit card debtCarrying excessive credit card debt is a reality that millions of Americans face daily. Not only can it sap you dry and drag you down, but it can trash your credit score, and prevent you from acquiring the things you desire most. While there are countless people looking to make money off of your plight, sometimes known as debt specialists, you have the ability to get out of debt on your own. If you have the will to reduce your spending and the earnest desire to live debt free, this simple five-step plan will get you back on track.

1.  Define Your Situation


As your credit card debt climbs, it can become painful to even look at those monthly statements, much less study them. Your first step in dealing with your debt problem is accepting that you have one, and gaining a detailed perspective of how deep it runs. Gather all your account statements. Then record the interest rates you are paying on each debt, in addition to your total monthly minimum payments and any fees associated with your accounts, and tally the total amount. Seeing the info laid out in front of you paves the way for what you need to do next.

2. Take Back Control


If credit card companies have raised your interest rates and started charging exorbitant fees, it’s time to take your power back. Be proactive. Start by contacting your credit providers directly to negotiate a lower APR and reduce fees. If possible, utilize a low-APR balance transfer offer to consolidate high-interest debt and lower your payments. If it’s a promotional APR, make sure you understand what the rate will adjust to once the introductory period expires. Is it the same as or lower than the card you’re transferring from? Consider this in addition to the balance transfer fee to ensure the transfer makes sense.

3. Analyze Your Attack

Like a cagey Old West gunslinger in a shootout, it’s wise to take first aim at the most dangerous desperado in the room. After you’ve secured the lowest rates possible, determine which cards to pay down first. The plan is to cover your monthly expenditures and the minimums on all of your accounts, while diverting any excess toward paying down the most expensive card – typically, the one with the highest interest rate. Once you pay off a card, set your sights on the next most-expensive account on your list, repeating the process until you are completely debt free .

4. Budget for Success


The key to this whole plan is to make and follow a budget that enables you to pay more than the minimums on your debt. Whether it means packing your lunch and dropping cable until you are out of the red, or trading in your car for something with a lower monthly payment and better gas mileage, it’s time to make the tough choices. Once you’ve determined where all your money is going, figure out where you can cut back, and do it. Even if you can only trim $50 per month, you can take feel good about knowing you are moving in the right direction.

5. Stay on Track


Now that you are steadily paying down your debt, never loose your grip again. Keep an eye on your accounts and if you’re still charging purchases to them, make sure to pay those off every month in addition to the extra payments you’re making. If budgeting is a challenge for you when plastic is on-hand, consider leaving the cards at home and paying with cash. As you make progress, you will see interest charges decrease, allowing you to expedite the process by devoting more money toward paying down your remaining balances.

Final Thoughts


Vanquishing the heavy burden of credit card debt will not only help you regain the ability to build wealth, but also alleviate stress that can sap the luster out of life. Your debt troubles likely didn’t develop overnight, so keep patiently pressing forward until you arrive at the finish line. By making a clear assessment, taking control of your situation, adhering to a responsible spending budget, and keeping your eyes fixed on the prize, you can emerge victorious in your battle to be debt free.

What other tips do you have for paying down debt?