Home Forums Hunting & Shooting Hunter's Campfire How to pay down credit card debt effectively?

I don't consider funerals as emergencies. They're dead. Who are you impressing? I didn't go to my parents' funeral, as I was in Alaska, during semester finals, and they were in No Dak, after a train/car crash. As a PAYG college student, I was already in debt. I saw no point...

Better one show respect/caring while they are alive, than beggar oneself for the funeral. Medical situations, etc. are of course different.

YMMV.

Some excellent advice already offered.

The "chip, chip away at it" & "focus on the one with the smallest balance first, then the next, and so on", strategy does work if you seriously do want it to. As you pay each debt off it frees up more money to throw at the next one.

When you do get your debts paid off start putting some money aside for upkeep/emergency repairs to vehicles, home, appliances, etc., and do all you can to pay cash as you go. Life can/does sometimes throw some unpleasant surprises, but when you think about it many of them really aren't too much of a surprise at all.

When your goals are achieved and all are paid off you'll be pleasantly surprized by the amount of extra money you get to keep each month instead of sending it off to pay debts. Sorta like giving yourself a fairly healthy pay raise.

When we were in a major pickle ~10 years ago, we did as Jorge mentioned and got out from under $18,500 of credit card debt and a bunch of medical bills!! We made the list of what we were bring in and every expense going out. After that, we got rid of cable, never ate out (that helped a TON), and I sold almost every gun I owned. I'd drop your cell phone and if you want to let the wife have a cell phone for safety purposes, make it an "Emergency Plan". We made very small but regular payments on the med bills and paid of each of the small CCs first and after we killed those, I paid on the "Big 3" according to their interest rates (mins to the lower two and max payments to the highest % card). As others have mentioned, we now use a CC for the cash back bonus (BP gas is 5% off!!) but pay the balance in full every month.

For a few years now, I've been keeping a running budget on an Excel spreadsheet that I keep on a flash drive in my pocket(and backed up on my laptop). I update this spreadsheet every day M-F and, for us, it's been a vital part of staying ahead financially (just looking at it is the biggest benefit). It's nice to see how spending today will effect our finances a 1-2 years out and the Excel formulas take all the work out it! In the past, we'd be running along fine and then have something like a car break-down, car plates, X-mas/birthdays sneak up on us and we'd have to break out the CCs. I now have funds set up and pay them regularly so when stuff like car/home repairs, X-mas, kids activities, etc. come along, we're paying for them out of the fund instead of going into debt.

Best of luck - you'll be very glad you took financial control of your life so KEEP IT UP!!!

good advice all, but the one I like best is adding to your income.



don't know where you are located or what price structure is at the salon your wife works at, but if she's any good, she'd be making 40-60K working for us.

PM if you want details and are up for a move.

If you don't have any cc debt, you can do a few things. I set up a 2d checking account at my bank online. I use a Costco American Exp card because they have a pretty good cash back thing (since I have a Costco membership, this card has no other fees, unlike many AX cards). Whenever I use it, I immediately go online and transfer the charged amount from my checking to the 2d account. When the bill comes due, the money is sitting there, already deducted from my checking and ready to pay the card.

Again, the trick is discipline. You MUST cover the charge NOW, not next month. If you can't cover it, don't buy it.

You still have to fund your retirement.

Derek, there's plenty of good advice here BUT, DO NOT, ABSOLUTELY, CANCEL CREDIT CARDS you've had for over 1.5 - 2 years... keep those lines of credit open. Freeze the darn things is a block of ice and put them in the freezer if you must, but canceling lines of credit you've had open for years will harm your credit score. Your credit score is your friend. Leverage is essential when used wisely, and your worst enemy when used unwisely as you know.

yea, this credit thing has worked out well for him so far...

Dave

Dave Ramsey, as in daveramsey.com, is great advice. Credit cards are poison and I'd kill them all but one which would get locked up. Lot of good advice on this thread. The rest is up to you and your wife to make the committment on.

Spend less than you earn and life is grand. Increase earnings or decrease spending. Your choice.

Derek,

I didn't see this until now. But Steely has it right. It's baby steps. I got rid of all my cards, not just put them somewhere, I cut them up and threw them away. Pay a little at a time, after some time, they slowly start to fade, as does your interest, and you payments take bigger chunks out of principal.

It takes time and work, but you'll get it.

Another thing my wife and I did was make a budget for each month. When you track you spending, it's amazing what you can live without. It has been working well for us, we have more disposable income, and don't really miss the stuff we "had" to have.

Good luck.

I note you posted that you were a teacher. In my area,Northern Va., many of my retired friends(I can't afford to retire) gain good income as a tutor. Many were not teachers, some were, but most specialize in a specific subject area. Typically, math English, history, etc. In addition to word of mouth they post at grocery stores, local newspapers, & even use hand outs at kids sports fields. Hand outs at sports fields has been very effective for them. Good luck.

And...if you get out free and clear...DON'T LEND MONEY TO RELATIVES! You'll be put on the bottom of the list. Ask if they might consider giving you a payment ocasionally and you'll become an instant A$$HOLE! Once..my brother-in-law was jailed on drug related charges. He wanted us to bail him out. I suggested he get in touch with a bail bondsman and maybe put his home up for security. I was labelled a PRICK by my-sister-in-law. It's funny when a relative who drives a better car, has a more expensive home, takes frequent vacations, etc., tries to put the bite on you.

If and when we use our credit cards the balance is immediately paid off. We have a car payment and utilities. Took a long time to get there...second jobs, etc. but it can be done.

+1,000
Been there done that have the T shirt.
The warm fuzzy feeling of helping someone supposedly better off than you and then being forgotten when times get better wears off fast!
Doug

Very true. I lent my brother some money once, with his promise that he'd pay it off within a few weeks. Few weeks past, and nothing. Every time I approached him on it, he'd say he'll pay back when he can, and become annoyed. When you have no leverage, you are on the bottom of the pay back list. It only causes family strife.

It's about impossible to get by with out at least one credit card because just about every gas station in the world requires you to prepay at the pump.

I use my Cabelas card to buy gas. Very soon high gas prices are going to get me a free scope. My wife uses hers to get free lodging at the Days Inn chain - we haven't paid for a motel room in years. A co-worker uses a credit card that builds frequent flyer miles to pay for everything, mortgage, groceries, utility bills, etc. He just flew his family to the Dominican Republic -free. The deal is you PAY IT OFF EVERY MONTH.

One delightful evening I called every company but two and cancelled their cards. That's when I found out they have a stop loss manager and their credit rates will drop from 29% to 5%. You can get 0% for a year.

On average it took me about 10 min. to listen to their speel before getting the card cancelled. With one exception. When I cancelled my CITGO card it went like this:

" I'd like to cancell my card."
" May I ask why ?"
" Your company is owned by a crackpot South American dictator who hates us."
" Your card has been cancelled, Sir."

Did cancelling my cards hurt my credit? Dunno, don't care. Still get 5 or 6 "You've been pre-approved for our credit card" letters every week.

O

Some good advice here.
So good it's a shame some of you guys aren't heading to Congress to get this nation straightened out.
As we all know the current blue suits are killing us!!!!

Just curious about something that keeps getting mentioned.
Why does cancelling a cc that no longer carries a balance hurt your credit??
I was fortunate to pay off my home last year and my truck the year before that and was actually contemplating getting rid of three of the four cc's i currently own.
Now i dunno??
Explain please.

That is absolutely rediculous advice. If I were you, I'd first of all get a 2nd job and apply all of that to the credit card debt, after having destroyed all of my credit cards (debit cards are) OK. I'd pay cash for everything, make a written budget, and have the discipline to stick to it.

The way I understand it, it's about your debt to income ratio, and the percentage of your available credit.

Say you had $10,000 total limit in four credit cards. You have one card run up to $2,000 but the banks can see that you have $8,000 available credit. Your percentage of credit available to credit used is 80%/20% or 4:1.

Now, if you cancel three of those cards, you have $2500 credit, and you have the same $2,000 charged. Your credit is now almost 1:1 which is bad, because you have almost maxed your available credit.

I've heard it explained also that a card is considered negative to your credit when the total balance at time of checking is over 50%. It's considered "maxed out."

So if you have $2,000 spread across all four of those original credit cards in $500 chunks, you look much better than if you have one card with $2500 available and $2000 charged.

Make any sense?

Texas Hunter - I was just going to ask the same question.. When I got divorced most of the cards the ex used were in my name so I got to pay off the balances.. Back then the card companies offered 0% for 6 to 12 months so I just kept transfering the balances to another 0% card and used the money from a second job to pay off the balance... Took me 3 years to get it done.. Never Again..

If your goal is to qualify for more debt, then by all means chase the credit score. If however your goal is to be debt free, and you already have a mortgage, then credit cards be damned, pay em off and tear em up.

If I'd had a bit more financial savy and self control I'd be a very different predicament financially. We're down to one cc, and hopefully will have it paid off by year end.