As you’re sitting down and preparing your own budget, you will need to include credit card payments as a part of your monthly expenses. It can be a real eye-opener for many people to add up the total of all of their credit card payments. If you’ve added up the figures for your monthly credit card payments and are mad, or worst yet – disgusted, by the huge figure that’s staring you in the face, be aware that this emotion can be the driving force in getting you to take the proper steps to eliminate your debt.
Credit card debt elimination can be a tricky thing, especially if you’re up to your eyeballs in debt. You may think about all of that extra cash you’d have on hand if you could pay your credit cards off. For some people, it’s a few hundred dollars. For others, it’s the equivalent of car payment, or even a small house payment. The ability to pay off that much debt can be challenging because you need to make more than the minimum payments. But, if you’re barely making it, how do you pay more than the minimum?
The first step in credit card debt elimination is the make a commitment to stop using your credit cards. Period. Cut them up. Or if that’s too extreme, I’ve heard of others who have frozen their cards in a block of ice and left them in the fridge. This way, you’re forced to think about the consequences of using your credit cards while the block of ice thaws out. It’s basically a cooling off period to make sure you aren’t using your credit cards impulsively. And no – a new pair of shoes or a video game for Johnny are not reasons to thaw the ice on those credit cards.
If you have a lot of credit card debt, you likely have been using your cards because you don’t have a lot of savings built up. Or perhaps you have some money saved up in a retirement account, but nothing that you can reach for in the case of emergencies. So take a step to develop a savings account for life’s emergencies. Even if you put no more than $10 or $20 per month into that savings account, it is at least a first step towards building a small nest egg. After you have accumulated about 2-3 months worth of your monthly expenses in that account, you’ll have a great nest egg that you can turn to in the event an emergency arises. We like to think that we’re not prone to random circumstances that don’t require money. It’s just not true. Our lives are filled with examples where something comes up that can only be fixed with cash.
With your credit cards not being used and a saving account created for emergencies, you will have taken your first steps towards credit card debt elimination. Then you can move on to actually paying off your credit card debt, which will take another plan of attack altogether.