Debt Free Christian

Credit Card Debt Reduction

The average American with debt carries more than $8,000 in debt on credit cards. For most people, this is a cause of stress and worry. It is hard not to feel tied to a job that is unfulfilling because of an enormous debt load each month. Learning to control and reduce debt is the first step toward financial freedom.

In this article, we will look at several ideas for credit card debt reduction including putting a stop to the spending habit, budgeting for debt reduction, and credit card debt reduction tips.

Putting a Stop to the Spending Habit.

To reduce your credit card debt, you must stop using your credit cards. This is a tough one. Perhaps you pay some of your bills with your credit cards. You tell yourself it is for the rewards like Disney Dollars and airline miles. But if using your credit cards for these purposes is adding to your debt, you should pay another way.

In addition, many people fall into the trap of paying for things with their credit cards with the good intention of paying at least that amount off when the bill comes, but when the bill comes, the cash is not available. They then pay the minimum payment and their credit card balance continues to increase.

Now, once you stop using your credit cards for bills and expenses, you also must stop using credit cards for discretionary spending. That means if cash is short and you want to catch a movie, you simply don not go, if going means pulling out a credit card to pay for it. You stop eating out so often, and hold off on buying the new shoes you don not really need.

Budgeting for Debt Reduction

Once you have dealt with your spending, you need to deal with the debt. If you are only making minimum payments, that is a habit that must end. Financial experts say that if you pay 2% of your balance each month (often the minimum payment is about 2% of your balance) it could take you 22 years to pay off a $1,000 debt! That is a scary thought, especially if your debt is significant and you are adding to it each month.

If you double your minimum payment each month, you can cut down your overall repayment to 11 years instead of 22. Paying so much more on your debt might seem difficult, but when you see your credit card balances decrease, you will be pleased with your efforts. Put in your budget an extra amount to pay toward one debt each month.

Credit Card Debt Reduction Tips

If you have more than one credit card you are looking to reduce the balance on, or pay off, here are some tips:

- Freeze your credit cards in a cup of water. Next time you need to make a purchase on credit you will have to thaw the cards out to use them- this will give you time to think about whether the purchase is a "need" or a "want".

- Use cash for daily purchases and budget how much you will need for lunches and miscellaneous expenses. If you run out of cash don't make any more purchases.

- Focus the repayment efforts on one credit card at a time, and make minimum payments on the others. This will help simplify the credit card debt reduction effort and feel less overwhelming than working on all the debts at once.

- When you get extra money, say a tax refund, or a bonus at work, apply that toward the one credit card you are working on.

- Add as much money as you can each month to the card you are working on paying off - even if it is just a few dollars extra.

- Set up your account online so can quickly and easily make payments from your checking account - this will aid in simplifying the process and you will feel better about paying an additional amount.

- Apply any regular savings in your daily life to your credit card debt. For example, any savings from using coupons or rebates you can apply to your debt.

- Avoid making late payments that could cause expensive fees as high as $35 from some companies.

- Consider starting a part time job or setting up a home buisiness to earn a few extra dollars each week to apply toward the debt.

- Make your financial situation a matter of daily prayer - you may be surprised at the opportunities that God will open up when we are obedient to Him and ask for His help.

Using these credit card debt reduction tips, you will see your debt being reduced.

To successfully see your credit card balances eliminated you must be committed. Pray together with your spouse to ensure you are both on the same page with your credit card debt reduction goals. It is not easy to take extra money and apply that to debt, and not spend it. It is not easy to shop with cash only and not credit, especially if it is to become a habit. But if you reduce or completely eliminate your credit card debt all the money that was going to payments and interest can go to savings and you will be surprised how fast it can add up.