It happens to us all. Everyone, from every walk of life, at one time or another, has found himself or herself overextended in credit card debt. It's an easy trap to fall into. It never seems like we're spending that much more money. But we do. We have every intention of paying off those balances before they get too high, but that minimum payment amount is tempting, especially when there are other bills to pay.
After a few months, those minimum payments don't seem so minimum, the balances are not going down, and we have a smaller amount of money left after writing all those checks to the credit companies. Then, we start using a credit card to buy essentials — things like, groceries.
The sooner you realize you are in over your head, the closer you get to reversing this dangerous downward spiral. You can't solve the problem unless you acknowledge the problem. Here are some essential and practical steps you must take to dig yourself out from under a mountain of credit card debt.
The first step is the most important step, and if you don't do this one, the rest of the steps won't matter. The first steps is to shred your credit cards. All of them. You may be tempted to keep one card aside — for emergencies. Don't do it. Part of the process is learning to live within boundaries and do without certain extravagances.
Second, create a spreadsheet that lists all your debts. Make a row for each card, and in the first column, write the present balance this month. Each subsequent column is another month. You should have enough columns for eighteen months up to two years. Then, sort the list by the balance amount in descending order, so that the highest balance is on top.
For the third step, you are going to make your monthly payments. Start by figuring out how much of your income is going to be allocated toward credit card debt. This should be after you pay your rent (or mortgage), utility bills, and allocate for essentials such as food and gas for your car.
Start with that dollar figure and look at your spreadsheet. Now you are going to allocate that money to each of your credit cards. Hopefully, your dollar figure is enough for you to pay the minimum payment for each card, with some money left over. Take that extra money and apply it to the card at the bottom of the list, with the lowest balance. After a few months, you will pay off that balance.
Cross it off the list.
Fourth, and going forward, follow this process every month. As each card balance goes to zero, and gets crossed off the bottom of list, you will have more money to send to the next card with the lowest balance. By the time you get to the end of your spreadsheet you will have much less debt. You will have a visual representation of the elimination of your debt, and, if you have any remaining debt, you will have the assurance that you can get there.
