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Managing Credit Card Debt – Part 1 of 2

{ Posted on Apr 02 2010 by Marcus Alston }

During these unprecedented economic times, there may be even more pressure to use credit cards to make ends meet.  However, now more than ever is the time to reduce your reliance on credit cards and live below your means in order to secure your financial future.  Below are some things you can do (“Do’s”) to guide you on how to manage credit card debt. 

9 Do’s

  1. Create a budget to understand where all your income is going.  Click here for guidance on a Budget. If your monthly expenses exceed your monthly income, your debt will only increase.  Go back to your budget, cut expenses and revise your budget so that your expenses are below your income.  Then stick to your budget.  If you need help cutting expenses, search the internet, talk to friends and family, or click here for saving methods and cost saving ideas.
  2. Make a Plan.  Plan a financial debt reduction plan from your budget and set goals.  Your budget, your cost cutting, and your spending will dictate how quickly you can reduce your credit card debt and other expenses.
  3. Control and reduce all your debt, including your credit card debt.  Your overall debt is probably impacting your cash flow and credit card debt.  You can control your debt by taking 5 simple steps.
  4. Stop using your credit card(s) and hide them.  Better yet, freeze them in a plastic container filled with water that will turn to ice.  This way it will be difficult for you to use them.  You could also cut them up and throw them away to make sure you will not use them for purchases.  Of course with online purchases, if you have credit card number, you could still purchase something.  If this is tempting for you, call the credit card company and request a temporary freeze on the use of your cards.  If you believe you will need a credit card for emergencies, keep one that has a low interest rate and a low balance so that you will not be tempted to run up a huge balance.  Most emergencies can be covered with a card with credit availability of $1000 to $5,000 on it.
  5. If you cannot keep from using your credit cards, pay in full every month and avoid a balance and interest charges.
  6. Pay with cash.  Consider giving yourself a cash allowance per week and pay for items in cash only from this allowance.  Once the allowance is over, you should not spend any more for the week.  Debit cards are better than credit cards, but they still allow you to overspend and exceed your budget.
  7. Pay existing balances on time to protect your credit rating.  Paying your credit card on time is a critical component of your credit rating.  Consider setting up automatic payments from your bank so it’s effortless.  However, make sure you check your credit card statement to make sure you are being credited with payment, paying on time, and paying at least the required amount.   .
  8. Pay more than the minimum each month and pay off your credit cards.  If you have more than one credit card bill, there are two primary strategies you can use which are detailed in 5 Steps to Controlling Debt Now.  In both cases below, if possible you should pay more than the minimum overall on all your cards in order to reduce the debt relatively quickly and to avoid paying a lot of interest over time.
  9. Pull your credit report annually and check them for errors and unauthorized charges or usage.  Get a free credit report at or by calling them at (877)-322-8228.

Tomorrow, I will talk about actions I suggest you not do related to credit card debt (“Don’ts”).

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16 Responses to “Managing Credit Card Debt – Part 1 of 2”

  1. Option five is the best. If you don’t have it, don’t spend it. Of course, if you are living paycheck to paycheck and a major event happens, you don’t have a choice(furnace, stove, fridge, car, family tragedy). If something does happen, treat it as an individual event, not just another reason to put your personal economic position into peril.

  2. Dennis, sound advice. I agree that credit cards can help you in an emergency and as you point out, try not to make it a habit to increase spending.

  3. Valuable information and excellent design you got here! I would like to thank you for sharing your thoughts and time into the stuff you post!! Thumbs up

  4. Wow, what a blog! I mean, you just have so much guts to go ahead and tell it like it is. Youre what blogging needs, an open minded superhero who isnt afraid to tell it like it is. This is definitely something people need to be up on. Good luck in the future, man.

  5. Im not going to say what everyone else has already said, but I do want to comment on your knowledge of the topic. Youre truly well-informed. I cant believe how much of this I just wasnt aware of. Thank you for bringing more information to this topic for me. Im truly grateful and really impressed.

  6. Thanks for the nice words. I try. Right now this is only a hobby and I really enjoy doing it in my spare time. Of course frugality is a way of life for me.

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