credit card debt
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If you're carrying credit-card debt, you know it's a financial anchor that's holding you back from truly enjoying your life. With interest rates averaging about 13 percent to 16 percent, there is no reasonable way to get ahead -- or even stay afloat -- financially unless you get those cards paid off.

So in honor of the Fourth of July, take this opportunity to declare your independence from your credit-card debt. Here are four straightforward steps to set you on your path toward that independence:

How much credit debt do you have?
I don't carry over credit debt, but I want to reduce how much I charge monthly.195 (16.4%)
Between $1,000 and $5,000258 (21.7%)
Between $5,000 and $10,000195 (16.4%)
Over $10,000542 (45.5%)
1. Track and reduce your spending. Write down where every penny of your money is going. Once a week, review the list and ask yourself whether you truly needed to buy what you were buying or whether it was something you could have either lived without or gotten a cheaper substitute for. Make it a priority to cut back where you can to free up the cash to pay down your debts.

2. Figure out how you may be able to earn some extra income. Overtime and moonlighting are time-tested ways to earn some extra cash on a regular basis to cover your costs. If those aren't feasible, consider holding a garage sale or selling stuff you no longer need via eBay (EBAY) or Craigslist. You may at least be able to get a one-time infusion of cash to make a serious dent in your debt.

3. Negotiate your interest rates with your credit card companies. If you have a good payment history, they'll want to keep you as a customer and may be willing to lower your rates with a simple phone call. If your payment history isn't particularly good and you're paying penalty rates as a result, they may still be willing to work with you. After all, they'd rather get their cash back at a lower interest rate than lose everything should you declare bankruptcy.

4. Build and execute a debt snowball. List your credit-card debts from highest interest rate to lowest interest rate. Pay the minimums on each one of them except the highest-rate card. For the highest-rate card, put every penny you can against that balance until it's paid off. Once it is, do the same on the new highest-rate card, and repeat until you've paid off every card.

Some folks find that they're more motivated by the quick wins they get by working their snowball plans from the card with the smallest balance to the card with the highest balance. If that's what it takes to get you motivated, it sure beats not paying off those cards. Just understand that you'll likely wind up paying more in interest by tackling the cards by balance order rather than by putting the same dollars each month toward your plan and working in interest rate order.

Light a Firecracker and Get a Plan in Motion

Those four straightforward steps are what it really takes to earn your independence from your credit-card debts. It's not an instant process, but once you're through it, you'll appreciate both the freedom from your debts and the extra cash in your pocket from the money you no longer need to put toward those payments.



Chuck Saletta is a Motley Fool contributing writer. The Motley Fool recommends eBay. The Motley Fool owns shares of eBay.

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9 Comments

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aupagandl

since this is my own screenname[aupagandl ] , I really do not use data storers daily,too much trouble trying to retrieve information when I need to research my stored subjects....... absolutely true .great for reseach though

July 15 2013 at 6:28 PM Report abuse rate up rate down Reply
Sophia Anne Walker

Might help deal with credit card headaches: http://www.newhorizon.org/credit-info/how-to-negotiate-credit-card-debt/
But you are not using a credit card in the first place, no need to Declare Your Independence from Credit-Card Debt, right?

July 02 2013 at 12:16 PM Report abuse rate up rate down Reply
ALD9000

I destroyed my credit card 20 years ago. Never replaced it. Result....I retired early with LOTS of money. My wise Father once told me..."If you don't have the money to buy it..you don't get it, period." He was right.

July 01 2013 at 10:05 PM Report abuse rate up rate down Reply
hlvme2

Thanks for this info. I have read it before and have since signed up with a debt management company and they are good. I think getting a part time job will also help me cut down this $4000.00 debt - Also I have some 3 prized comics I can sell and use the money on the bills. What do you think? Do you know where I could sell my comics DC IronJaw and Fantatic Four- HELP!

July 01 2013 at 7:42 PM Report abuse rate up rate down Reply
maryweinstein

I'm the choir. Any balances on credit cards are paid off monthly here. Credit cards are used solely for convenience, not out of need.

July 01 2013 at 12:18 PM Report abuse +1 rate up rate down Reply
1 reply to maryweinstein's comment
Jamie

aren't you ******* special!

July 01 2013 at 3:48 PM Report abuse -3 rate up rate down Reply
1 reply to Jamie's comment
mrspelosi

Jamie dear I bet your bus driver on the short yellow bus thinks your special too darling.

July 01 2013 at 10:23 PM Report abuse +2 rate up rate down
debzal6

for someone who does not travel by air/ship or never has need for a hotel room -- no credit card no problem. try traveling off- shore or even to canada with cash only.-- use a credit card , then pay it off with in a week or two. if you can't pay your card off in a timely manner 1. you can't afford it or 2. you have no financial discipline

July 01 2013 at 11:58 AM Report abuse -1 rate up rate down Reply
djohn11

If you use them right they are great, but like janeswizzle said, some people should not have them.

July 01 2013 at 11:38 AM Report abuse rate up rate down Reply
janeswizzle

Some individuals should never have a credit card. Especially the ones with no fiscal responsibility, much like our government.

July 01 2013 at 11:13 AM Report abuse +1 rate up rate down Reply