Dear Readers, here are some tips for people trying to get out of debt:
1st Step: Stop the interest on your cards by transferring the balances to a 0% credit card. There are often balance transfer fees of 3-4% for making the transfer, but if it is less than the annual rate you are currently paying you will save money. There are also some cards which do not charge a balance transfer such as this one from Chase Slate. Most of these cards require at least good credit, so you can check in advance if you qualify by looking at your credit score (for free) on www.creditkarma.com.
2nd Step: Make payments aggressive so that the debt clears quickly, rather than spread out over time. This makes it easier to get to your goal faster. This is because it is easier to be 'austere' (tight) with you finances in the short term, but staying with a super-tight budget long term is harder to sustain. Just think if you postpone all discretionary costs (vacations, new furniture, etc), and are able to put all of your cashflow to debt payments, you may be able to be out of debt in a year or two! (Max. 3 years should be the goal, if it takes longer, look at new ways to bring in additional income or talk with a credit counselor).
3rd Step: Go into 'austere' mode with your finances. For the duration of the debt payment phase, try to live on as little as possible. Need a new desk - ask friends for an old one or shop at thrift stores. Question everything you have to buy and put all possible money towards the debt payments. Remember that this stage is building your prosperity as it is clearing your old debts! So think of it like a cleanse (of debt) where you need to eat a simple diet (spending) so that the toxins move through much faster. That way you won't have to live with them anymore.
4th Step: During this austere spending phase, or 'cleanse diet' spending, consider what you need and be open to the possibilities of finding new ways to cover things. You will be suprised (once you get over the frustration and anger) how many ways there are. Road trips instead of flight trips etc. This will help you save in the future so you don't get into debt. Also, start to link the idea of having money to spending more on costs (with the opposite effect that when you don't have money, you spend less). This is a good habit to have in life.
5th Step: Stay disciplined and reward yourself for good behaviour (but stay within budget). Rewards may be a movie once a month (whereas you used to go every week), or some such event, but keep it low on spending and high on feeling. You'll find ways to do this.
Congratulations! You are now credit card debt free and can go on with your life, using your income to build savings and reward yourself with more wealth to enjoy throughout the rest of your life. Keep up the good work.