Good for you! Seriously, a thousand kudos. This will be one of the absolute best things you can do for yourself. I know it changed everything for me. Getting out of credit card debt was the peak. Once I paid off my credit cards, which were over $20,000 at one point, I knew I could do anything I set out to do. Paying off my credit cards just ended up being the first stone on the path toward taking charge. Everything else seemed easy after that!
Remember, as long as you are paying debt, you're never fully in charge of your money. Someone else is telling you what to do with a portion of your money. Click through for 10 steps to kissing your credit card debt goodbye!
Step 1: Stop Using Credit Cards
When you're taking a cup of water out of a boat every month, you don't want to add any more, even if it's a tablespoon. I knew when I was in deep, it was the first thing I had to do to get rid of the stigma of credit card debt.
Related: 7 simple ways to save money on your electric bill
Step 2: Assess the Damage
Quit hiding and take a look at your financial picture. I know, it's easier to hide from it, but let's see what the damage is, and then we can see how to kill it!
Step 3: Divide and Conquer
There are several different strategies you can use to eliminate your debt. Here are five examples. Pick one. Divide your total credit card debt by 12, and aim to pay off that amount each month.
Step 4: Do the Hustle
Make extra money and put every single dollar you're earning toward your credit card debt. Deliver the newspaper, deliver pizzas, sell things on eBay, just get started. Picking up a second job, or a part-time hustle, will make it easier to kill that credit card debt once and for all!
Step 5: Think of It as a Guaranteed Return
Let's say, for the sake of argument, you're paying 10% interest on your credit card. Now, let's think of investing. Where else can you get a guaranteed return of 10% each and every month without effort? I'll save you the trouble: nowhere. So, paying off the credit card is the right call financially. First pay this, and then think about other priorities.
Step 6: Celebrate Small Victories
Did you pay off one of your cards? Did your debt drop a digit? Have you paid off half? Keep track of these small victories, and CELEBRATE them. Do a little dance. Don't go on a long trip, though. Not until you're done.
Step 7: Keep Paying It Off
Look, you've been able to pay off a huge amount of debt every month. The trick? Keep paying it (well, don't give it to Bank of America, that's just silly), and you'll see your savings grow. Put the money you were paying toward your credit cards into a savings account at a different financial institution, and make it more challenging to spend from that account.
Step 8: Get Friends and Family Involved
Announce your goals. Tell your friends, tell your family, tell anyone who will listen what you're going to do this year. Keep them informed every time you hit a small or large goal. They'll buoy you through the tough times.
Step 9: Check Your Score
Keep track of your credit score by signing up for something like Credit Sesame, a free service that sends you notices every time your credit score changes. This is motivating, because as you pay off credit cards, you'll start getting more notices that your score is increasing!
Step 10: Encourage Others
Help your friends get to the same place you're going, and encourage each other along the way! Nothing is more responsible than living below your means and taking charge of your money. Spread the word!
-By Kathleen O'Malley
For 7 steps to recovering from a holiday spending hangover, visit Babble!