7 Steps To Eliminate Credit Card Debt

Here are 7 common sense guidelines to eliminate credit card debt:

1. If you owe money on more than one credit card, DO make a second list of all your balances and sort them by balance, minimum payment, and interest charges.
2. DO write down all of your fixed expenses in a budget. Rent or mortgage, car insurance, car payments, cell phones, utilities, day care, fixed loans, etc. Then try to come up with a reasonable budget for things like food, drinks, dry cleaning, etc. that you don't have to buy.

You might think that paying off the card with the highest interest rate is the smartest thing to do. But there are two better ways to do things.

First, you should cut down on how many credit cards you have. Pay off the smallest balance first with larger payments, and keep doing this until you only owe money on one credit card. Your final goal is to pay off your monthly balance in full every month, or to get to $0.

The other thing you can do is pay off any card balances that are more than 50 percent of your credit limit. If you have balances that are higher than this, it could hurt your credit score.

1. DO try to make more money. Your rent or mortgage is probably your biggest expense, so you might want to think about getting a roommate. If you like to have some privacy from time to time, you might want to consider an International student for shorter periods.
2. DO pay for things with cash or a debit card from your bank account. If you don't have money, you can't spend it.

Think about making a blog. Both Blogger and Wordpress are free blog sites. If it gets a lot of attention, put some Google Adsense ads on it. When you reach $100, you'll get your first payment.

1. DON'T get a new credit card that has a 0% APR for the first six months.
2. DO keep an eye out for small costs that add up. If you always go over your monthly minutes on your cell phone, you might want to change your plan. How about that $2.75 latte or cappuccino from Starbucks every day? That's nearly $7,000 per year!

You probably get a lot of junk mail trying to get you to sign up for a new credit card with a 0% APR for the first 6 months, after which the rate goes up to 24 percent or even higher. Then, after 6 months, you would move your huge balance to a different piece of plastic. Unfortunately, the biggest risk is that they just give you more money to spend, which means you have more cards and more debt.

If you aren't very disciplined, this doesn't work because you just get deeper and deeper in debt. The goal is to cut down on the number of credit cards.

1. DON'T get a bank loan to pay off all your debt by consolidating it.

The APR on a bank loan at 12% is less than the APR on a credit card at 24%. It sounds like good advice, since you can't spend money you don't have. You will be asked to cut up all of your credit cards (except maybe one with a low limit), and you will have fewer credit cards.

But your bank might not give you a loan if you don't have anything to back up your request or if your debt to service ratio is too high. Most of the time, you need a co-signer. These kinds of loans are not like regular loans for a car or house, where they can take the item back if you don't pay.

But if you choose this method and can't pay back the loan, either your co-signer will have to pay it (which will make them very angry!) or you'll lose your assets, if you have any. The worst thing that could happen is that you could go bankrupt. It's better to upset one creditor than to lose your whole home.

Do research, learn as much as you can, and be creative to get out of credit card debt now!