How to Eliminate Credit Card Debt

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					                      How to Eliminate Credit Card Debt

Double Edged Sword

Credit cards are a double edged sword. They can be your friend but for most people, it
has become a silent assassin of freedom. By being in credit card debt, you have given
your freedom to these credit card companies. You will forever be their slave until you
start taking control of your financial situation and start eliminating your credit card debt.

Honesty and Transparency

First thing you have to do is to know and analyze your financial situation. What are the
debts you have? Which one has the highest interest? Which one is putting a strain on your
relationships? For example, if you owe your friend some money for some time now and
the relationship has soured because of that, it would be best to pay off that debt first to
save the relationship.

You can start by listing down all your debts with complete information, e.g. balance and
interest rates. Arrange them in the order of highest interest rate to lowest rate on an
annual basis. By doing this, you can see how much credit card companies are making
money off you through interest. Hate that. Be angry with that. Be determined to wipe off
your credit card debt as soon as you can.

Choose your strategy

The next step is to choose your strategy. There are essentially two ways to tackle credit
card debt. The first is to focus on eliminating the biggest debts with the highest interest
rate first. The second is to eliminate the smaller debts with the smaller interest first.

The first strategy will allow you to spend the least money on paying credit card debt but
it might take longer to eliminate all your credit card debt. The second strategy will boost
your confidence as you eliminate first those small debts and get them out of the way to
focus on the bigger ones. It also gives you the impression that you are in control of your
financial situation.

Eliminating the Biggest Debt

By opting to take the first strategy, you should first call the credit card companies and ask
if you can negotiate a lower interest rate and work out a payment scheme that will allow
you to get out from that debt.

If they allow the lowering of interest rate, take advantage of it. If not, seek out companies
that allow balance transfer at a lower interest rate.

After this, it's time to focus your budget on eliminating this debt. It's time to live frugal
and at the same time, increase your income. If you need to work on a second job, so be it.
Look to do freelance part time job. Try to do some garage sales. Sell your stuff on eBay
and think of other creative ways to make money that will go to credit card payments.
Avoid eating out. Get rid of unnecessary expenses. Do you really need Cable TV?
Simplify your cell phone plan.

Focus your mind and strategies in eliminating these huge credit card amounts that is
stifling your freedom. Once you complete the biggest one, give yourself a pat and then
focus on the second one. Redirect the amount you paid on the biggest debt to the second
biggest debt until you completely pay off all your debts.

Starting Small

The alternative route is to start small. Gain a sense of control by eliminating the small
debts first. You will gain confidence and momentum as you slowly eliminate one debt
after another in your list. Focus on paying off first debts that you owe family or friends.

This will help your relationships with them to recover and the emotional stress that arose
from it will be gone from you. Ask moral support from your family and friends as you go
through eliminating the scourge of credit card debt from your life.

While doing this, you should still be looking to increase your income and to live frugally.
Keep your expenses low and use discounts and coupons to your advantage. Only spend
things on what is necessary. Delay off first investment until you have paid off all your

Keeping an Emergency Fund

It's crucial that you still devote a part of your budget to maintaining your emergency
fund. You never know what emergencies can arise and it's important that you have some
cash on hand so that you are liquid. If you use all your money for credit card payments,
you can be caught off guard with your lack of illiquidity and be forced to use your credit
cards which will be two steps backwards in your quest for financial freedom.

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