Debt Free: Seven Steps to Reduce and Eliminate Credit Card Debt

Credit cards are a convenient way of not having to carry wads of cash to make purchases and, in the short term, they can help consumers take advantage purchasing options when cash flow and amazing sales do not match up. Using credit in the right way can greatly enhance the quality of our lives.

Unfortunately many people are far too liberal with credit card use. Using credit cards to buy things one cannot afford or to artificially maintain a standard of living that does not match one’s income may be fun for a while but are disastrous in the long run.

Most consumers do not really understand the cost of using their credit cards. Being able to afford the payments does not mean that one can actually afford the purchase. Using credit cards and making minimum payments can double or even triple the cost of a purchase because those payments mostly cover interest charges. That means a twenty-dollar pizza paid for on a credit card might end up costing sixty bucks!

Consumers who unwisely use credit quickly discover they are on a credit card treadmill. It doesn’t take long before most of their cash becomes tied up in making payments on their cards. There isn’t cash left to live on and when they use up the cards they have, they apply for more, either requesting limit increases or applying for new cards. Reality only begins to set in when their credit applications are eventually denied.

If you are beginning to recognize the credit card treadmill in your life, it may not be too late. But do not wait. What may just be a tank of gas here or a bag of groceries there will quickly become an all out inability to afford even the basic necessities of life without credit.

If you take decisive action now, you will not only save your credit report, you will save thousands of dollars and in the long-run; you will save your quality of life. Here is what you need to do.

1. Stop using most of your cards. OK, your heart just sank. Take a minute and breathe. You may have to tighten your belt a little and sacrifice in order to do stop relying on credit but if you don’t do it now, it will be done to you eventually. Realize that for as long as you have been using your credit cards, you have been borrowing against your future income. It has always been predictable that you would have to sacrifice spending cash on stuff you might want later because you used credit to buy stuff you wanted earlier. Maybe you never thought of it this way but that is exactly what you did.

2. Carry only ONE card and pay it off each month. You can still have the convenience of using a credit card without the expensive interest. Simply do not use the card unless you have the cash in the bank to pay it off when the statement arrives. If you do not carry a balance from month to month, there should not be any interest to pay. If there is, get rid of that card!

3. Pay more than the minimum. Making the minimum payments means paying the most interest. When you are actively reducing your debt, you should over pay the minimum balance due by least 20%. If you do this and do not use the card, you will be applying the additional payment to the principal balance due and you will reduce your debt. Walletwizard.com offers a free, easy to use form that helps do this with more than one credit card.

4. Pay bills when they arrive, not when they are due. Most credit card interest is based on your Average Daily Balance. The sooner you make a payment, the lower the balance and the less you will pay over time. You also avoid the possibility penalties in the form of late fees and the interest rate increases that may result from your payment arriving after the due date.

5. Be careful transferring balances. If you have good credit, you are probably receiving offers to transfer your other balances to a new account. In general, applying for more credit is a bad idea because of the danger of using your old cards after transferring the balance. Sometimes those introductory rates are awfully tempting! Before you apply, carefully read and understand the terms of the new card. How long will that introductory interest rate last? What do you have to do to maintain that rate? What interest rate will kick in after the introductory rate expires?

6. Create and maintain a spending plan. Have a clear understanding of your income and expenses. You have to live within your means. In fact, for a time, you will have to live below your means in order to pay off your debt. Tighten your belt a little more and throw as much money at your debt as is sustainably possible.

7. If you need help, get it; but beware. If you watch television, you see countless commercials for debt solutions promising to reduce your interest rates, consolidate your payments, or even pay less than you owe. Before you opt for any of these advertised solutions you need to understand your options. Carefully consider the terms, the associated fees, and the consequences, particularly to your credit report. If it sounds too good to be true, there is likely something you do not understand about the program.

If you are having difficulties associated with credit card debt, doing nothing will only make things worse. Acting now to reduce and even eliminate your credit card debt is one of the best things you can do for a brighter financial future.


Joseph Onesta is a speaker, trainer and work culture consultant. As Director of Education for Consumer Credit Counseling Service of Los Angeles, he helped thousands of individuals and families toward financial wellness through articles, seminars and his personal finance certificate course. He now offers his services through employers who understand the value of Personal Finance Employee Education. Visit his website at www.integrityhpi.com.

Steps of Faith....

At the root of all of the practical considerations and obligations we juggle day to day, lay four essential aspects of an individual’s life. They are the physical, emotional, intellectual and spiritual parts of our lives and as we proceed, we learn that finding balance between these four is our critical challenge. When we think of balancing our lives we often consider what we can do to achieve better balance. A lot of our talk is about steps we can take.

While most often considered a spiritual force, it is not reserved for religious purposes. When we take a step in faith, we are using an internal power that has the potential to change everything. We should use it wisely.

On a recent channel surf through my cable selections, I happened upon one of those now ubiquitous weight loss programs which focus on extremely obese people and their struggle to lose weight. The show featured a woman who, with evidence of before and after photos, demonstrated that before she had children, she was young and svelte. After giving birth her busy life working and caring for her children lead to gaining a pound here and there. Eventually she was so fat a film crew became interested in her. She blamed her obesity on having children.

I do not discount the weight women gain in pregnancy. Nor do I minimize the effort required to lose that weight after childbirth. My point is that to blame her obesity on having children completely discounts the fifteen or twenty years of emotions, attitudes and behaviors that are more likely the cause of her obesity. She has placed herself in a kind of prison, the bars of which are created by her own belief.

When she acts on that belief, she is, in a very powerful way, taking a step of faith. Faith does not necessarily imply God at the other end of it. Certainly, adhering to religious principals is an act of faith but faith and religion are two different things. Faith is a human tool that we all use. Every time we act or react because we believe something, we are stepping in faith. Tightrope walkers, for example, step out onto the rope believing that they can and will cross the rope safely. Their belief is well-founded on the hours of practice they have had but every tightrope walker is aware of the potential danger of falling. They simply do not believe that they will fall. If they believed that they were going to fall, they would never step out onto the rope.

The unfortunate thing for a lot of religious folks is that they associate faith with God or a miracle from God and leave it at that. There is a very real reason why many people ask God for a miracle and never get it. Faith itself is the miracle they are waiting for. When we learn to use faith appropriately, we unleash a power, call it spiritual if you like, that enables us to achieve our goals and aspirations.

When we are willing to take risks, however we define them; it is because we believe something is either possible or impossible. The trick is discerning the difference between what we know to be true and what we think or feel is true.

Some people think you need courage to take risks. That is not true. You need courage to face danger. You need faith to take risks. Risk and danger are two different things and so are faith and courage. It takes courage to run into a burning building to save a child. It takes faith to believe you can do it at all.

Every time I step in front of an audience, I act in faith believing that the audience will benefit from my speech, enjoy my performance and my client will consider my fee to be money well spent. It is like walking out on a tightrope. I have plenty of practice but the possibility of my failing is there. So, public speaking is a kind of risk I am willing to take.

It is easy to see faith involved in actively taking risks. We also need to see that faith is equally involved in not taking them and this is ultimately the point I am at pains to make. When we decide to not do something it is often because we believe that we will fail. In some cases, that is good. I will never step out on a tightrope since I am absolutely convinced I would fall off. That being said, what achievable goals or dreams am I avoiding simply because I have an unfounded, even irrational belief in failure?

If there is an aspect of our lives with which we are growing uncomfortable, if anything at all is going to change, we need to pay attention to what it is we believe about it. Once we clear up what we believe about the things we would like to change, the most formidable obstacles are gone.

It may sound like hocus pocus, psychobabble or even new age religion but the truth is that we act as a result of what we believe. We live our lives doing some things, avoiding others and likely wishing we could someday do still others all because of what we believe about the world, about other people and about ourselves and yes, even what we believe about God. Those beliefs may or may not be factual but we make them real to us.

We all have a spiritual side to our lives. It is that part of us that helps us cope with the unknown and, within the context of our own lives, the unknowable. Science gnaws away at the unknown but any honest scientist will admit that there is a lot we do not know. Until we know absolutely everything that is knowable, we will continue to take steps of faith, acting or not acting based on what we believe to be true.

So we are all stuck with faith of one sort or another. Faith is not something you can create, build up or muster but it is a natural part of being human. We act on it every day. Along our journey to find happiness, balance and purpose in life, we would do well to consider what it is we believe about every situation, condition or obstacle we face.

Joseph Onesta is a speaker, trainer and consultant. He publishes a free e-newsletter called Balanced Life. His company, Integrity HPI partners with companies to develop an "employer of choice" work environment.