The Debt Blogger

Credit card debt can be extremely uncomfortable - even downright painful. Long periods of heavy debt can put a strain on your relationships, make it difficult to qualify for low-interest loans, and keep you from attaining overall financial freedom. Fortunately, there are a number of no-nonsense, time-tested ways to conquer credit card debt. The following are 5 key points for eliminating your credit card debt and getting on the road to financial health.

Tip #1: Envision yourself each day as being debt-free:
If you are like most people deep in debt, you have fallen into the vicious cycle of spending, on average, more than you earn each month. Hint: to be debt-free, you need to think like a debt-free person! The right mindset is essential for preparing yourself to automatically take the right daily actions to eliminate your credit card debt. It is important to condition your mind into thinking that debt is unsavory, ugly, and unattractive, while having money to invest means freedom and peace of mind. Exercise: each morning when you get up, each night before you go to bed, and at various points throughout the day, envision yourself as your life will be when you are fully debt-free. How does it feel? Now, hold onto that feeling the next time you are tempted by an unnecessary purchase.

Tip #2: Pay down high-interest credit cards first:
Sign up for any low-fee balance transfer offers offered by credit card companies when doing so means moving your debt to a lower-interest card. Then, rank your various cards for which you carry a balance from higher interest to lower interest. Focusing on rigorously paying what you can each month toward your highest-interest cards first and pay only the minimum balance due on your other cards. Most experts agree that this is the fastest, smartest way to pay down your credit cards.

Tip #3: Prepare a monthly budget:
Getting a handle on your monthly expenditures is absolutely essential. Exercise: make two lists for monthly expenditures: need-to-haves and nice-to-haves. Then, commit to prioritizing your spending each month in this order: 1. need-to-haves first (including paying minimum balances on lowest-interest credit cards!), 2. payments toward high-interest credit cards next, and 3. the occasional nice-to-have goodie for yourself as a reward for working so hard to pay down your debt.

Tip #4: Pay cash whenever possible:
This sounds like a no-brainer, right? The fact is that many people who are heavily in credit card debt continue to use their cards each month to pay regular expenses. While using and then paying down your credit cards fully each month can be an advisable element in an overall strategy to improve your credit scores, for now it is best to stay away completely from charging anything onto your cards. Get into the habit of paying cash each month, as doing so will give you a better feel for the relationship between what you make and what you spend each month.

Tip #5: Stop using all but one credit card:
Most people get into credit card debt by regularly using too many cards. Credit cards are not bad in and of themselves and having a large line of credit can help your credit score. But, credit card companies make most of their money off of us when we start charging more than we can pay off! So, put all of your credit cards away in a closet, except for one which you can use for dire emergencies.

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Whether you are in a deep financial hole or would like to get the most out of your money there are some things that you should know to accomplish these goals. Money management can help educate you on the inner workings of money, help you avoid the many financial pitfalls that exist and show you how to make money work hard for you. If you would like to get out of a difficult financial situation and achieve financial serenity, here are some money management tips that are extremely helpful.

In order to truly succeed, you must first understand how money works. This includes learning how to create a budget, save, how to be responsible with credit and how to choose lending products that fit your means and lifestyle.

Create a Budget Creating a budget can help one understand their unique financial situation. It is extremely easy to create a budget. On one side of the paper, put all of your revenue including your income from your job, and any money you receive from investment, etc. On the other side of the paper list your expenses. Expenses include your mortgage, your car payment, gas, tolls, daily coffee, everything you can think of. If your income exceeds your expenses then you are in a good position to save your extra earnings. If your expenses exceed your income then you are in big trouble and you must cut back your expenses to cover your spending.

Savings In order to manage your money, you should start building a savings. It is important to pay yourself first once you cash your check. Whether it is $20 per week or $200 per week make sure you save something each month. This savings can be helped later on to invest and make your money work for you.

Be Responsible with Credit Cards Credit cards are not free money, they are unsecured loans and they can wreak havoc on irresponsible spenders. Many people fall deep in debt by spending carelessly with credit cards. Credit cards should only be used in an emergency or when you have the money to cover your purchase. Credit cards are not as convenient as most people think. In fact, if you pay the minimum payment the credit card company asks of you each month, you may find that an item that cost you $100 really cost over $200 by the time your credit card debt was paid off.

Choose Loans Wisely Most people require a mortgage or car loan to purchase high priced items. While these lending products have helped millions it is important to choose the right ones that fit your means and lifestyle or else you may find yourself in financial difficulty. Before taking out a loan, do some research and educate yourself on the many types of loans available. Make sure the loan you choose has low risk. For instance, while banks may try to sell you products such as Adjustable Rate Mortgages or Interest Only Mortgages, you may want to stick with the Fixed Rate Mortgage. At least with this mortgage the interest rate will never change and you will know how much each month’s payment will be for the life of the mortgage.

Connie Barker is the owner of several financial websites including those dealing with Bad Credit