Ways to Eliminate Your Credit Card Debt

Do you have credit card debt piling up? Maybe you brought it with you to graduate school. Maybe you have accrued it during graduate school. Regardless, you have some debt that is eating away at you. Here are a few simple steps to help you eliminate your debt while you are in school:

  • Take Stock of Your Debt: Figure out where you stand, honestly. Don’t estimate it. You can’t fix the problem if you don’t know the reality. Write down the total debt and the interest rate on every card that you have.
  • Analyze Your Spending: Take an honest look at your income, expenses, and spending. Track your spending from the last few months. Are there ways that you could cut down your spending, even just $25 a month, to help pay down your debt? Every little bit adds up.
  • Create a Budget: Create a new budget for yourself that is focused on debt elimination. Wondering how to create a budget? Check out this post.
  • Generate Some Extra Cash: Look for ways to earn some extra cash. Sell a few of your items online. As a student, you probably have some old books that are lying around that you don’t plan to read again that you could sell. Do some odd jobs: yard work, babysitting, tutoring, etc. Give up something for a few months: eating out, junk food, Starbucks coffee, new clothes, etc. Put all of the money that you save towards your debt.
  • Choose Your Payoff Strategy: There are two common payoff strategies. One is to put all of your extra cash toward the highest interest credit card while paying the minimum on the other cards. Once the first one is paid off, you will have even more extra cash to apply to the card with the second highest rate and so on. For more information about this method check out this article. Another way is to start with the lowest balance first, paying the minimum on the others. Though this is not the most cost effective it is certainly a great way to motivate yourself as you are starting out. For more information about this method check out Dave Ramsey’s Debt Snowball.
  • Ditch The Plastic: During this time, hid your credit cards and just go with cash. It may seem archaic, but it is very wise. You spend 20% less when you pay with cash than when you use credit cards. This will also help you to keep on budget by only taking out as much cash as you need.
  • Motivate Yourself: Make concrete, trackable goals so that you can watch your progress. Celebrate your little achievements along the way. If you gave up coffee, you might treat yourself to a Starbucks or if you gave up eating out you might treat yourself to a meal at your favorite restaurant. It is up to you! Just make sure that these celebrations don’t involve you spending outside of your budget or, even worse, using your credit cards.
  • Get Help: Debt elimination can be very challenging, particularly if you have a lot of debt and/or you are dealing with many different credit card companies. There are many great debt elimination programs that can guide you through this process. I highly recommend Lutheran Social Service of Minnesota’s Financial Counseling Service. They have debt management plans to help people, not just Lutherans, pay off credit card debt and avoid scams for a nominal monthly fee. Another great resource is Dave Ramsey‘s debt management classes.

Join the Conversation: What are your tips for paying off credit card debt?


Frugal New Year’s Resolutions: Will 2012 Be Your Year?

Will 2012 be your year to become more frugal? Most people who make a list of New Year’s Resolutions will include at least one item related to spending, saving or sharing their money. Whether you are preparing to take on a daunting list or you haven’t even given a thought to New Year’s Resolutions, why not make a frugal goal for the coming year. Here are a few ideas:

  • Managing Your Credit Card Debt: Do you struggle with credit card debt? This year you could create a plan to eliminate your credit card debt and begin paying your credit card bills on time.
  • Increasing Your Charitable Giving: Often times charitable giving ends up being the last thing on the list when money comes in. Why not begin making it a priority? If you are more of a spontaneous giver, why not begin making your giving more consistent?
  • Paying Off The Interest On Your Student Loans: This is immensely important because it can save you a lot of money in the long run, but many students don’t take advantage of it.
  • Cutting A Bad Spending Habit: We all have bad spending habits, those little (or not so little) impulse buys that really add up. Whether you buy clearance clothes because they are a bargain but you never actually wear them or you over-indulge in pre-packaged foods, this is a good time to identify and begin cutting your bad habit.
  • Creating and Maintaining a Budget: If you haven’t done this already, this is a great habit to form. For more information check out these blog posts on creating and maintaining a budget.
  • Begin Saving Money: Savings really do add up even if it is just $20 per month. If you can take it out of your checking account by automatic withdrawal that’s even better, you won’t even miss it.
  • Living Within Your Means: Challenge yourself to actually live within your means this year by being intentional about only spending what you are earning.
  • Form Your Own Frugal Community: Get a group of friends together for a frugal party every month. Start a group that tries to find the best happy hour deals. Gather some people together to make homemade frugal gifts that you can use for any occasion.

I’m still trying to decide on my frugal New Year’s Resolution. What is your New Year’s Resolution for 2012?