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How to Get out of Credit Card Debt Using Self-Help Techniques
by Amy Cooper-Arnold
Running up credit card debt, itís so easy to do, especially since we are all trying to achieve the American Dreamó a new chair for the living room, braces for the kids, a new outfit for Saturday night dates, eating out with friends, and driving ou

Running up credit card debt, itís so easy to do, especially since we are all trying to achieve the American Dreamó a new chair for the living room, braces for the kids, a new outfit for Saturday night dates, eating out with friends, and driving our new SUV that guzzles the gas and increases the insurance bill. It all seems to have become a part of normal daily living. We pay the minimum due, watch the balance go up, and put on a happy face because weíve got it all.

Gerri Detweiler, author of Slash Your Debt, Save Money & Secure Your Future and founder of, notes,

"Americans are pretty optimistic so it often takes a long time for a consumer to realize credit card debt is a problem. Most of us are counting on something to help us get rid of the debt quickly. It could be a raise, business income, even an inheritance or lottery ticket."

Thatís what Chip and Shelley Smith of Midland, TX thought when they first got married. Happiness must at least partly come from keeping up with the Jonesís. But years later and upwards of $50,000 in credit card debt Shelley says they had nothing to show for it. They arenít world travelers and they werenít having any fun. It was the daily trips to Target and Pier One Imports for items they didnít need but thought they might use one day that got them into trouble.

They finally woke up after attending a Dave Ramsey seminar and realizing the craziness of paying interest for pizza. After making changes in their lifestyle, selling lots of items on Ebay including family heirlooms, and working their way out of debt, Shelley now sleeps well at night free from wondering how to pay their bills.

You can sleep well too! Detweiler says if you have credit card balances running up with no idea how to make them start running down, if you have no idea how long it would take and how much it would cost to pay your balances off, or if youíre paying off a credit card with another credit card itís time to get serious about your debt.

Create a Repayment Plan

This is the first important step in your journey because it lays out the path ahead. A repayment plan will clearly show you all your debts, how long it will take you to pay it off, and how much it will cost in interest and fees to pay it all back. It will also give you a good idea of what options you have. For example, Detweiler says if your plan shows itís going to take more than 3-5 years to pay off your debt on your current budget, then itís important to seriously consider debt counseling. Bankruptcy is also an option, but most consumer advocates stress that is should always be an absolute last resort.

For help on creating your plan, visit The site offers everything from a personalized repayment plan to monthly credit reports, and ways to lower your finance and insurance costs, build better credit, monitor and protect your assets, and optimize your bill payments.

Finding Money for Your Payments

Itís time consuming and costly to try getting out of credit card debt by paying only the minimum, especially if you continue to charge purchases. But at times it can feel almost impossible to find the extra money to be able to pay more. Here are some tips to help you get started.

The "B Word"

While itís not most peopleís favorite thing to do, taking one month to track every single penny you spend through a budget is an invaluable step in getting out of credit card debt. Youíre sure to find areas where you can cut back. The biggest areas of overspending are food and transportation. Detweiler says sheís seen consumers discover they were paying $200 a month for pizza delivery or $160 a month at the office vending machine. Donít be discouraged, however, if you only find $10 as any little bit can help reduce your debt.

After tracking spending for a month you may find it necessary to make a few lifestyle changes. It may not be easy, but the changes arenít necessarily permanent either. Here are some ideas to get you started living a more moderate lifestyle.

If you have good local public transportation or good bike routes, consider living with only one car. If you do need two cars consider a trade down, which could also lower your gas and insurance bills.

Reduce your housing costs by setting the thermostat a little higher in the summer and a little lower in the winter. Or do you even have an extra room you could rent out? Maybe moving to a smaller place would save you money, assuming the savings outweighs the cost of moving. Perhaps itís a matter of dropping some cable channels or living without Internet access at home.

Cutting your food bill is one of the most effective ways to find extra money. Try not eating out as often, keep a price book, shop alone, eat a snack before grocery shopping, buy in season fruits and vegetables, eat less meat, and avoid cold cereal (hot cereal is cheaper and healthier).

Making minor lifestyle changes can help you achieve the new American dreamófreedom from debt for all!

Get Another Job

Thatís right! It might temporarily take a part-time job delivering pizzas to get you and your family back on the right path. Or if you are living off one income so mom (or dad) can stay home and raise the kids, consider opening a home daycare or other home based business. That way you still get to be with your own children and earn some extra money at the same time.

Sell Some Stuff

Chances are you have lots of sellable stuff you arenít using packed in the back of your closet or in boxes in your garage. And if you arenít the sentimental type go ahead and sell grandmaís china. Even if you are sentimental, consider keeping only your most treasured heirlooms. Try not to overlook something that doesnít appear valuable. The Smiths inherited a painting that hung in her grandmotherís garage for years and it ended up being auctioned off for $40,000 at Christieís in Boston!

Tap Into Your Assets

If you do have some savings, consider pulling some of it out to pay off your debt. You typically don't earn near enough interest in a savings account (typically around 1-2%) to outweigh the interest youíre paying on credit card debt (typically around 15%). You can consider tapping into a 401K plan too, but be cautious with this option. You will need retirement savings some day and according to Detweiler, these types of accounts are usually protected during bankruptcy proceedings. It may be a good idea to speak with a lawyer about bankruptcy options before using retirement money.

Moving Forward

Once youíve found some extra money to start paying more than the minimum youíre ready to move forward. Determine a fixed monthly payment you can put towards the debt. Pay only the minimum on all your credit cards except the one with the highest interest rate toward which you will pay as much as your budget allows. Detweiler adds,

"For most people paying the highest interest rate credit card is best. Once itís paid off, then move on to the next highest interest rate keeping your same fixed monthly payment."

Another option that worked well for the Smiths is paying the lowest balance credit card first. Smith said that quickly getting rid of the first credit card debt gave her the confidence and motivation to move onto the next.

Contact Credit Card Issuers

Itís always a good idea to contact your credit card issuer to try and negotiate a lower interest rate. If they wonít give you a lower rate, try applying for a new low-rate credit card. The "Card Reports" section of is a great place to shop and compare credit card offers. If you do get a new low-rate card then immediately transfer as much of the balance from your higher rate card(s) as possible. If possible, try not to exceed 50% of the credit limit of any of your cards as doing so could lower your credit score. By staying under the 50% mark you may find new low-rate credit card offers appear in your mail box, which could give you a valuable tool in negotiating.

If you are behind in your payments, some credit card issuers may even be willing to set you up on a hardship plan where your required payment is reduced. Credit counseling agencies may even be a better alternative. Detweiler notes,

The site is not responsible for any content in it. E-mail: alldir[at]gmx[dot]com
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