How to Legitimately Eliminate your Credit Card Debt

Advertisements for companies promising to eliminate your credit card debt are everywhere these days, just waiting to take advantage of people in desperate situations. While some of these companies do provide legitimate debt reduction or debt consolidation services, why pay someone else to do what you can do for yourself at no cost?

As someone who owed more than $15,000 just a few short years ago and is now debt-free and financially independent, I know a thing or two about eliminating credit card debt on your own, without the help of credit consolidation services. Follow the steps below to create a plan for repaying your debt and you too can be on your way to enjoying financial independence.

* Cut up your cards. If you’re struggling with credit card debt, I’m sure you’ve heard this advice before, but I’ll say it again because it’s vitally important. If you have a lot of credit card debt, you most likely don’t have a very good handle on your spending habits, so don’t tempt yourself by keeping credit cards in your purse or wallet. You don’t need to cancel your accounts, which can damage your credit score, but shredding your plastic can prevent you from adding to your debt. You may decide to save one card for emergency situations, such as a major car repair or home appliance replacement, but keep it in a safe place at home if you can’t trust yourself with it in your wallet.

* Take an inventory. Once you’ve cut up your cards and are no longer adding to your current debt, you need to take an inventory of all of your credit card debt. Write down your current balance for each card, as well as the interest rate, annual fee and any other relevant information.

* Design a plan. Armed with your credit card inventory, you can now design a plan for getting your debt paid off. Debt calculators are available online at sites like, which help you to figure out how much you need to pay each month to be debt free by a certain date. Experimenting with these calculators can help you select a timeline that corresponds with the monthly payment amount that you can manage. Simply enter your credit card balances and interest rates and the calculator creates a payment plan for you.

* Develop a hierarchy. If you have more than one source of credit card debt the next step is creating a hierarchy of what should be paid off first. It can be tempting to pay off the smallest balances first, but this method is generally not in your best interest. Instead, put your cards in order of interest rate, from highest to lowest, and focus on paying off your credit card debt in this order to avoid paying hundreds or even thousands of dollars in accumulated interest.

* Adjust your budget. If you’re currently only paying the minimum on your credit cards each month, you’re going to be stuck in the debt cycle for many years and end up paying a great deal of interest. Now that you have your plan of action, you need to start making large payments to your highest interest rate card. In order to make these payments, you may need to adjust your budget. Fixed expenses, such as rent and car payments often can’t be helped, but extra expenses, such as cell phone plans, cable services, food and entertainment can often be trimmed significantly. If you’re serious about eliminating your credit card debt, you may have to go without some luxuries for a while, but a little deprivation is well worth the cost of financial independence.

Now that you’ve made some extra room in your budget, start making those larger payments and work your way down the hierarchy. As you get balances paid off, your monthly payments on remaining cards continue to grow larger and larger, which means the debt payment process picks up momentum over time. Hang in there and remember that financial freedom opens up your options, provides stability and allows you to properly invest your money for the future.