A Guide For Getting Out Of Credit Card Debt

Print Friendly
get out of credit card debt

Start saving your money

Whatever it was, I’m glad you are now convinced – credit card debt is bad.

Credit card debt will easily destroy your plans for any kind of a sensible financial future.  So, good for you.  Let’s get rid of the credit card debt so you can get out of debt.

Get Out of Credit Card Debt: The 8 Steps

1.  Remember that things will probably get worse before they get better.

Many credit card users float payments.  This means you typically spend next month’s dollars by using the credit card today.  Basically, your cash flow is upside down and backwards.  You must stop this habit.  The first month will be the hardest.  In fact, when you first get rolling, it will seem like you are trying to fit two month’s worth of expenses into one billing cycle.  Basically, you are.  You will be paying this month’s expenses (in cash) and last month’s expenses (that you charged).

On the front end, you will feel like the work is not worth the reward.  I encourage you to really work at this for the first couple of months because your gratification will be delayed.

Remember when the Israelites left Exodus?  Things got worse before they got better.  The Israelites, in fact, wanted to go back to Egypt.  After just a few weeks, you will want to go back to the old way because it was easier.  Please don’t.  Do what is right, not what’s easy.

2.  Get organized.

Typically, if you have credit card debt, it is because you are not naturally an organized person.  That’s not bad, but you will need to organize your finances before conquering your debt mountain.

Here is exactly what you need to know:

  • Which credit card accounts are active?
  • How much do you own on each card?
  • What is the interest rate?
  • When is the next payment due?
  • What is the minimum payment?

Here’s a free debt snowball spreadsheet to help you get organized.

3.  Get motivated.

Only a small fraction of personal finances has anything to do with math (pun intended).

The larger factor is attitude and discipline.  Do you have the attitude necessary to get out of debt?

You need to commit to become debt free.  You need to be willing to sacrifice and willing to make changes.

Your greatest asset during this time will be your financial focus and motivation.

4.  Don’t take on any more credit card debt.

If your bath water was running out of your tub because you didn’t have the plug in, would you turn up the water, or would you plug the tub?  Most likely, you would put the plug in.

Your credit card payments are the leak in your personal finances.  By not making any new purchases, you are actually starting to make progress in the right direction.

Three things you can do with your old credit cards:

  1. Destroy them: completely remove the temptation to charge on your credit card.  Cancel your card.
  2. Freeze them: it’s going to take a few hours to defrost, so at least you won’t use it before you have a lot of time to think things over
  3. Hide them: Have a friend take the card and hide it somewhere safe.

5.  Find money by making a budget.

The best place to find money is in your regular pay.  If you do not keep a written budget, there is money to be found in your own paycheck.  Learn the secret to a successful budget.  Here’s a step by step guide on how to make a budget.  If you’re a first time budgeter, here is a sneak peak into our budgeting process.

If you cannot find money in your budget, then you probably need to increase your income.  This means getting a second job.  Here are a few good part time jobs.

6.  Get current on credit cards.

Make the necessary payments to get and stay current.

Tread Water on the balance of all but one card

This is where financial focus is essential.

Be content not to make any progress on all but one of your balances.  Then attack that balance like crazy.

7.  Start paying off credit card debt.

So which card should you focus on paying off first?

There is a lot of debate on the topic.  Here are three frequent methods. You decide which works best for you.

  1. Pay off the balance with the highest interest rate first. This approach makes the most mathematical sense, but we’ve already concluded that personal finance is about a lot more than math.
  2. Pay off the lowest balance first. As you pay off this small balance you have a psychological win.  Then you take that money you were paying on the first balance and apply it to your next smallest balance.  This method is frequently referred to as the debt snowball and is endorsed by Dave Ramsey.
  3. Pay off the debt you hate the most first. Perhaps there were circumstance around why you got a particular debt.  You hate the fact you got the debt and hate even more how you got the debt.  You will get the biggest emotional payoff if you get rid of this debt first.

I think there is a lot of value in the debt snowball, but to help you make the best decision, here are more ways to get out of debt.

8.  Keep going.

There will be setbacks along the way.  But, don’t let them discourage you.  There are many people who are also getting out of credit card debt, and they are a testimony to both how difficult it is and how rewarding it is.  The process might be years, but when it is finished, it will be worth the effort.

What did you do to get out of credit card debt?  What suggestions do you have?


  1. says

    It seems to make sense to pay off high interest cards first mathematically speaking. But like Dave Ramsey says, if you were using math you would not be in this mess in the first place. ;)

    Dave teaches to pay off the debt lowest balance to highest. Ignore interest. This gives you early successes to help keep you motivated.

    I suppose you could do the higher interest rate first, but I chose to do it Dave’s way personally.

    • says

      Thanks for your comment. The whole math vs. motivation question is an interesting one. I think it does depend on your personality. So many people have sucessfully used the debt snowball so I guess I tend to favor it a little bit.

  2. says

    The best way is to only use cash and start paying off your credit cards. Some cards have a zero interest for 3 years if you transfer your balance. Most of the time it has a lower interest rate then your current balance after the 3 years. You have to pay a 3% fee but in the long run it’s worth it!

  3. says

    Credit card concept was not intended for burying people into indebtedness. It is a mode of financial institutions to help people be financially viable in times of need, like bulk purchases, it gives safety because people will use card instead of handling cash and so on. However, due to personal whims and mismanagement, some people get buried (and I have been there). One mistake that I had before was taking advantage of the so called “promotions” that credit card companies are giving to credit card holders. It was late already when I realized that they are giving away those gifts but I don’t actually need them. For example, I have to spend 1,000 credit in order to get pizza. Then I’ll find myself having a hard time in budgeting by the next month when the bill comes in. But thanks to articles like this. Now, I am no longer a victim of financial burdens.

    • says

      Thanks for sharing your experiences. Your right that the misuse of credit cards is really the problem not the credit card themselves. That said there are some people who shouldn’t be trusted with credit cards. If I had credit card debt problems I’d cut my card up in a second.

  4. Norma Jean says

    I have downloaded the snowball spreadsheet. Is there a way to mark it off once you make a payment? Delete a column?? Thanks

    • says

      I would just highlight the column. You don’t want to delete it because it would be a good reminder of what you’ve already accomplished.

  5. says

    Hi Craig, you have some good suggestions about getting out of debt.

    With the real estate bubble bursting , a lot of people here in Orange County, CA have lost their homes, maxed out credit cards, and have been forced into renting a home instead owning. Their credit has taken a major hit and they are going to have to work to rebuild it.

    I think that for many people, paying off the lowest balance first may be the best thing to do. It can be a small but important bit of positive affirmation that they still have some control over their life and that they can move forward through these difficult times.

    For many people, renting a home will be the best and possibly only option for a while. It may take two to seven years for them to rebuild their credit to a level allowing them to buy a home again at a decent interest rate. Thanks

  6. says

    The debt snowball works for alot of people. Some people might not even attempt to pay off their debt if they started with their high interest rate debt first. The debt snowball psychologically makes you feel that you are accomplishing something and then in turn you pay off more debt.

    • says

      I think your psychological DNA really impacts what makes you feel more energized. I have a cousin who likes boxing – it gets her adrenaline pumping. Not me. What really energized me to get rid of debt was high interest rates and the loss one every dollar. There simply is not a right way to do it, but you’re right that lots of people have found the debt snowball to be an effective method.

  7. says

    Hey Craig,

    Great Post; it’s really key that people get organized with their credit cards. I’ll pass this on to a number of young adults. The best thing we can do is teach our younger generation on being responsible on using Credit Cards for positive ways before they get in debt.

  8. says

    The best way that I have found to pay off credit cards is to pay off the credit card that has the highest minimum payment and the lowest balance.

    This way you get a large minimum payment off your back and then after paying off the card you can apply that larger payment to the next card that has the highest minimum payment and the lowest balance.

    In very short order you will be paying off credit cards faster than you thought possible.

    And before you know it you will be debt free on your credit cards.

  9. says

    Greetings, I do think your website may be having
    web browser compatibility issues. When I take a look at your web site in Safari, it looks fine however when opening in Internet Explorer, it’s got some overlapping issues.

    I merely wanted to give you a quick heads up! Other than that, fantastic website!

  10. says

    Michael Phelps was scheduled to hit the pool at the Mesa Grand Prix in Arizona April 2014.
    Nearly every game of Starcraft 2 can be won with perfect play.
    Strategies and tactics is what Starcraft 2 is all about.
    When filing for a chapter 7 with your attorney Tyler,
    TX, for instance, here are a few of the things that might
    happen. Question #3: In the Fellowship of the Ring, the bow Galadrial gives to Legolas is strung with elf
    hair. Men, women and children are all considered random and viable
    targets as a victim of this game. The couple exchanged their
    own number sin a night out and started their love relationship
    in 2007. Being a good listener is very important in both your personal life as well as your professional life.
    In 1999, the Oscar-winning actress Natalie Portman played as Princess Padme Amidala
    in ‘Star Wars: The Phantom Menace’. CD, DVD Duplication is Widely
    Used Media for Duplication and Replication. The fast pace action and explosions surely play a
    part. If you come in all guns blazing, then this boat for you.
    Luring Capcom back to Nintendo would be key as the two companies have a
    long history together. Metal wall panels come in various designs that are framed within geometric shapes.
    “Take away the TV, take away the video games, set some standards for our children. The silver replaces the copper during the immersion process. s not fun walking or exercising your dog in the rain and cold. Once you come to the normal path you would take up the hill to the facility, cut left and continue along the coast. You need not close in your enemy to ensure your win. Of course, you can add more characters if you so desire. Demonology talents are intended to make summoned demonic minions stronger and more useful, as well as enhancing conjuring spells and giving you better passive bonuses. This finish does, however, further stress on high layer circuit boards, resulting in ineffective long-term use. The endgame is when with fewer units and building left on the board, it is safer for the gathering units to come out and join the final battle. Wii Sports Resort is an expansion of Wii Sports that puts you in a vacation resort, getting to windsurf, golf, do martial arts and shoot hoops. It’s going to add a whole new dimension to the Museum.

  11. says

    An intriguing discussion is definitely worth comment.
    There’s no doubt that that you need to write more on this issue, it may not be
    a taboo matter but usually people don’t speak about
    such topics. To the next! Cheers!!

  12. says

    It collaborates successfully, pumps out ‘fires’, and statistically really
    great. I am good at sharing Jesus and piritual concepts with
    people who are not Christian’s. And as far aas I can tell the HPV vaccine may or may not prevent some but not all types of
    HPV, which may or may not cause some types of cervical cancer ‘ which again, seems questionable to me.

    This particular investor thought our price and
    that of our competitors was to high. We also see clips of Phillip showing off some dance
    moves, and Stephanie and Krista (Russell’s gals) about to creat some Russell-esque havoc.

    It really comes as no surprise that iit would finally come,
    especilly when the Advanhce has officially been obsolete for nearly
    ffour years. mon weren’t hard enough; the sinistter Team Rockeet is trying to control the most powerful – Pok.
    We hear voice- over from Michael, the lawyer, accusing Ben of being a ‘fraud’ and ‘impersonating a southern gentleman. Because Ubisoft
    owned the rights to the Far Cry series, Crytek created the Crysis
    series as a spiritual spin-off. The second being that the game was put
    into the main tournament, adding pressure and forcing me to share the machine with others
    and have less attempts. The first thing players should do is head to options and turn on ‘elective mode’ which will allow the player too fully
    customize what ability goes into each slot. Compare prices and play hunting games, check models, and see
    which stores have the best merchant ratings. These ordinary activities will surely spark a lot off
    ideas in your kids. The best part: That bit about tthe chlorophyll thaat I mentioned before is,
    in fact, my favorite out of the whole book.
    If you can’t be with thee one you want, get sloppy drunk with the one you’re with.
    Goldacre is here to teach you how to evalhate placebo effects, double-blind studies, and sample sizes,
    so that you can recognize bad science when you see it. If Amazon wede to clean house iit
    might be motionally catastriphic for them. 99 Blu-ray Sale (includes District 9,
    The Thing, Donnie Darko, Casino Royale, Kill Bill, No Country for Old Men,
    Forrest Gump, 2012, Fight Club, Black Hawk Down,
    Shawashank Redemption and many more). HEAD COACH JIM WELLS:Coach Jim Wells became the seventh coach in Southeastern Conference history to
    win 600 games when the Tide posted a lopsided 24-0 win over Alabama A&M on March 17.
    With the mlwing under control there are a few more
    regular golf course jobs. Meanwhile, Wisconsin had att least two, sometimes even a third and fourth
    player on their roster that could spark the offense any given nioght with
    a scoring outburst. The fairway area off a golf course is a vast area and it is no small task tto keep
    it in a playable condition which would usually be between 12mm and 18mm.

    Last year, we saw a number of amazing original games on PSN like
    Flower, Pixel – Junk Shooter and Gravity Crash
    and you can expeft to see more exclusive titles in 2010.

    Bostoniaan and founder of Hangoput Industries, Pano Anthos gives us reasons why in his post-mortem (paraphrased).
    They are worried about whether or not the stranger saw
    Gold use magic and what it could mean to the inhabitants of Storybrooke.

  13. says

    First my problem is I don’t like to pay bills. 2nd it wasn’t debt for small purchases it was big ticket items. It was still a problem. I didn’t have that first months problem.

    So knowing my own tendencies I quit using them and feel so much better and it let me do more things with more freedom.

    Living debt free is a great idea.

  14. says

    Hey Craig,

    great piece. Wish I had known this advice when I was younger. We work with sellers and buyers in OC home market and it’s risky when people start taking out equity loans.

Leave a Reply

Your email address will not be published. Required fields are marked *