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  1. #1

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    Getting Rid of Debt

    My next goal is to wicked pay down my debt, and get rid of all my credit card debt asap. Have others done that/are doing that? What methods work for you?

    My plan is the following: cutting "fun" style expenses that I can't pay for in cash (ballroom dance lessons are, sadly, gone), paying more than my minimum payments each month, and taking any "windfall" money I get (tax returns, adjunct teaching money, etc.) and using it for the debt.

    What I am not cutting, which others might cut, is my skating, and that of my daughter. That, I pay for in cash, anyway, but that cash will still go toward skating, not toward credit cards.
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  2. #2

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    Try to cut out eating out. That tends to be a huge expense for a lot of people. Even buying from the dollar menu adds up.
    Look into your electricity bill and see if you can save there.
    "Eve was not taken out of Adam's head to top him, neither out of his feet to be trampled by him, but out of his side to be equal with him, under his arm to be protected by him, and near his heart to be loved by him."

  3. #3
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    Do you ever watch the show Till Debt Do Us Part on CNBC at 10? This woman comes and helps a family who is trying to get out of debt. One of her first things is to make sure the family creates a budget which includes a set amount for debt repayment each month. She then makes sure they track every dollar spent and puts the budgeted amounts for various categories in cash (usually in a set of jars) so that people have a visual reminder of how much they've spent and what's left in each category.
    "The Devil is joining in, and that's never a good sign." Phil Liggett

  4. #4

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    A written budget is a great help. I have saved by careful grocery shopping (comparing advertised prices and going to whichever store is less that week, discount houses, etc.). Also, I buy almost all of my clothes at thrift stores. The clothes are surprisingly nice, and I still save even if I get them altered to fit better.

  5. #5

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    Every time my hours get dropped to part time at work I cut out all DVD rentals, book purchases, and most meals/movies out.

    Good luck with paying down the debt.
    If you reread your work, you can find on rereading a great deal of repetition can be avoided by rereading and editing.

  6. #6
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    hubby and I have been debt free (well, other than medical bills) and credit card free for over 6 years now. Some things we do to stay this way:
    1. cars. We saved up and purchased both our cars cash which meant no monthly payments and we ended up paying less for insurance because of it.
    2. live in a smaller, much less expensive place. We have 4 kids but we don't need as much space as others make it seem. Another plus for this is that it gets us out of the house so our kids get plenty of outdoor activities and exercise.
    3. eat at a restaurant only once or twice a week (usually during the weekend) and that includes fast food. Everything else is cooked at home. It's always cheaper (and usually healthier) to buy more groceries than eating out.
    4. Set aside "fun" money each week and don't spend even just a penny more.
    5. Electronics... we know families that spend THOUSANDS on electronics each year. We only replace something when it's broken and is not worth fixing

    Good luck. It's tough and takes a lot of commitment but well worth it IMHO.

  7. #7
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    Thought this worth sharing - for the first time this month, one of my credit card statements came with this notation:

    The estimated time to repay the current statement balance if you only make the minimum monthly payments on each due date is 33 years and 9 months.
    This is on a balance of just $1900.00. Further, if minimum payments stayed the same, the total paid over that time period would be $15,390.00.

    If that isn't motivation to make clearing credit card debt and paying the balance every month a priority, I don't know what is.

    Good luck everyone.

  8. #8

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    my favorite

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  9. #9
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    I have been paying down long term credit card debt, and have made significant progress in the last 2 years. Like you, there are expenses that some people would say to eliminate that I refuse to give up (for me, it's dance classes), but here are things that I have done that have sped up my debt reduction:

    Don't use credit cards for anything but emergency expenses (and not those if you have savings that can cover them). If you have anything recurring billed to a CC, even if it's small, switch to your debit card - I used to have my cell phone and internet charged on a CC because I didn't like the idea of giving those vendors access to my cash account. The amounts weren't significant, but my CC payment went farther once they were removed.

    Pay more than the minimum balance due. Way more. more than the alternate amount noted on your CC statement (see Jenny's post above - statements now come with a timeline for min payment and a higher payment). Set an amount you'll pay each month, and keep paying it. As your balance decreases, that monthly amount will pay for more of the debt and less interest. Commit to the idea that monthly payments can go up, but not down.

    If you have offers for lower interest cards, take them. Because I have significant debt but always pay on time and way more than required, I am deluged with offers of 0-4% interest cards or balance transfers for existing cards. The 3-4% transfer fee is worth it in the long run if you are transferring from a high interest balance. Other people might say to consolidate your debt to one card, but I don't. I have balances on 3 cards right now, and I move balances around as necessary to maximize the advantages of short term low/no interest offers. This does mean keeping an eye on things and remembering when interest specials change, but for me, it's worth it. Also, if you pay off one CC, simply add that payment to the next highest interest card so you are still paying the same amount each month.

    Right before payday, if you have extra cash in your bank account, make an extra payment to your highest interest card. I also make my regular CC payments on my payday - I don't wait for the due date.

    Keep your CC statements and periodically look back to see your progress. If I'm feeling like I will never get out from under this, I look back and see where I was a year ago, 5 years ago. It's a great feeling to see those balances come down - and see the difference in the monthly interest fees.

    I started getting aggressive in paying down my debt 2 years ago. Even with approx $6K new debt added last year due to unforeseen emergencies, I will be done with it next year.
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  10. #10
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    Good suggesstions from everyone, here are a few other ideas.

    Cut up the credit cards. If you must, save one for real emergencies (ie car repair), but put that card in a block of ice in your freezer - really. That way it isn't readily available.

    If it is possible, you might think of consolidating some of the debt on a lower interest card.

    Also, and you must be very careful about this, if you get one of those offers to transfer your balance at no interest for 6 mos, and there is no transfer fee involved (because that is where they can get you), and you can pay whatever you transfer off before the end of the period, you can do that. I did that once and saved a load of interest. But, you need to be extremely vigilant. It isn't for everyone.

  11. #11

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    A few years back, I found myself with too many cards, too much debt and not enough cash flow. I got rid of it all in a year by focusing on one card at a time. I put myself on a strict budget and calculated how much I could have each month to pay on the cards. I paid the minimum on all but the one with the lowest balance until that was paid, then focused on the next lowest and so on. I was shocked at how painless it was.
    AceOn6, the golf loving skating fan

  12. #12
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    I pay my credit card bill entirely each month. Yes, it is a considerable expense, but the interest I save is well worth it.

  13. #13

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    Quote Originally Posted by Polymer Bob View Post
    I pay my credit card bill entirely each month. Yes, it is a considerable expense, but the interest I save is well worth it.
    I do that now as well, but there was a time when that was impossible.
    AceOn6, the golf loving skating fan

  14. #14
    Corgi Wrangler
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    Quote Originally Posted by Polymer Bob View Post
    I pay my credit card bill entirely each month. Yes, it is a considerable expense, but the interest I save is well worth it.
    I was going to say...pay them off. I haven't carried a balance in years (and that was only about $1200) and the only reason I haven't paid this month's Amex in full is I'm going to have to dispute a charge if the issue's not resolved. (A hotel did not switch cards when they should have and now I either need to get a cheque from the person I paid for the room or she has to get the hotel to cancel my charge and rebill her. Fun fun fun.)

    Don't use credit cards. I tend to use debit whenever I can as I prefer to spend money I already have.

    And while I think he gets a tad overboard on some things, do check out Dave Ramsey's Financial Peace University. I don't have any debt (mortgage aside) but I find a lot of what he says very sensible.

  15. #15
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    I don't have any credit card debt, but I do have a chunk of student loan debt that I am chipping away at. Like you, one expense I am never willing to cut is skating. It's in my budget and that's non negotiable. Budgeting has helped tremendously. I use Mint.com and it shows exactly where all my money goes and where I need to cut if I do go over budget somewhere. Budgeting will help you cut expenses. There might be a place you overspend that you don't even realize. For me, I was spending a lot on food outside of regular grocery shopping. Once I realized that I was able to curtail that a lot.

    I do listen to Dave Ramsey's podcasts and wheras I don't agree with everything he says, I think his debt snowball method has merit. http://www.daveramsey.com/article/ge...snowball-plan/

  16. #16

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    Most of the advice has been given. I just wanted to add that not using credit cards is an extreme measure unless you don't have the self-control to pay it off in full each month or within a few months.

    I have a Mastercard and a Visa backup. It's very rare, but there have been times when Mastercard wasn't accepted so I had to use the Visa. My main card has a point reward system so everything possible goes through it including groceries and bills for phone, electricity, water, etc. Then I do a full payoff on the card. I've managed to collect a lot of points that I can redeem for cash back on the card or gift cards to different stores.

    My special purchase treats to myself, like my portable satellite radio, were all payed for with the redeemed gift cards. It was essentially free to me because I was spending the money on the other bills anyway.

    It's a great way to understand how much you actually spend in a month because it's all in one place. Also you can treat yourself while you're looking at ways to reduce your spending.

    ETA: This is easier to keep track of if you have a card that starts out with zero debt already. But you can still do this with accumulated debt cards. The trick is to make sure that what you are adding now is paid back + more for what you're trying to reduce. It can get a little tricky so I don't advise it unless you're willing to do a lot of adding and subtracting.

    I just like the extra gift card treats you can give yourself to make your reduced spending efforts less painful. And cash back rewards against the card will make your debt reduction faster without you having to put more money in.
    Last edited by mpal2; 09-22-2010 at 05:44 PM.
    "Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm -- but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves." – T.S. Eliot

  17. #17
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    If you have more than one credit card debt, begin with the card that has the highest interest rate, and be alert to transferring amounts to cards with lower interest rates. This may require you to keep a close eye on the interest rates.

    figure out what caused you to be so much in debt. clothing? eating out? attending concerts or plays? vacations? We often think that it is one thing and that is not the true reason. So you might cut eating out but still not make a dent, if you continue the real cause. Some ideas that people gave me

    • eating out: how many times do you eat out, including breakfast or lunches? calculate what that amount is each month. Then set a specific amount to spend each month, because cutting out all eating out will make you feel deprived and just like someone who is dieting, you will fall off the wagon big time
    • books: (this was one of my major expenses): use the library and occasionally buy a new book
    • clothing: pull everything out of your closet EVERYTHING, it will drive home how much stuff you actually have. (one of my major expenses).
    • Put money or checks in envelopes for essentials - house payment, car payment, utilities, etc., including the amount of credit card payments you commit to each month. When all essentials are paid for, any excess is your fun money for eating out, movies, etc. stick to that!
    Last edited by numbers123; 09-22-2010 at 05:39 PM.

  18. #18

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    I'm not sure if this option is available in the US, but you could talk to your bank about a line of credit that is attached to your chequing account. We did this a number of years ago. We applied for a line of credit that was the total of all our credit card debt. We paid off the credit cards keeping only one for emergencies. The line of credit showed up as a negative balance on our chequing when a pay cheque went in it reduced the debt and the interest. As we spent money both went up. You have to be very vigilant to make sure you are actually paying it down over the course of the month. It is worth the extra work because the interest you pay is significantly less because it is calculated daily. We saved over $300 per month in interest. I believe Manulife has a program like this for mortgages.
    A good rant is cathartic. Ranting is what keeps me sane. They always come from a different place. Take the prime minister, for example. Sometimes when I rant about him, I am angry; other times, I am just severely annoyed - it's an important distinction. - Rick Mercer

  19. #19
    drinky typo pbp, closet hugger
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    Quote Originally Posted by Polymer Bob View Post
    I pay my credit card bill entirely each month. Yes, it is a considerable expense, but the interest I save is well worth it.
    Quote Originally Posted by danceronice View Post
    I was going to say...pay them off.
    When someone is asking how to eliminate existing debt, this really isn't helpful.

    Five years ago I had a really hard time figuring out how to deal with my debt problems, in large part because everywhere I turned for advice, all I got was "pay off the entire balance of your CC every month" or some variation of "cancel your cable bill, go to a cheaper phone plan, keep your car an extra year instead of buying a new one, take your vacation close to home, blah blah". None of this applied to me. My CC balances were way too large to pay off (hello, that was the whole problem), and all the expenses that I was supposed to give up, I never had to begin with. It made me feel very hopeless.

    What resonated for me was reading an article in BUST magazine by someone basically in the same boat I was in - she lived on the cheap and was still in debt. The ideas she had were at my scale, and I felt like I could get moving.

    "Pay off your CC balance in full" is great advice for how to avoid debt in the first place, but when someone's asking how to eliminate debt that's already there, not so much.
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  20. #20
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    I had the situation where I went over my amount on my credit card limit...and I got a charge for that, not to mention they jacked up the interest rate. I called, got the card frozen, and they put me on a payment plan to pay it down. It is a lesson well learned. I used my credit card for an overseas trip, and then when I got back my dog needed chemo for cancer(she made it though, so it was definitely worth it...that was 4 years ago that she had it) so that was another 1500 on top of that, and then Christmases etc, it spiraled out of control from there. I ended up with over 10k of debt. I was put on a 5 yr plan, but I'm getting a part-time job now so I can put all of that money towards my debt.

    I'll echo the eating out thing. If I eat out, I spend about 100 dollars a week on food. If I go to the grocery it is more like 50 dollars a week(and if I get coupons, even less) I was eating both lunch and dinner out for a while. I'm not just eating out for lunch or dinner twice a week, and it makes a huge difference in spending.

    I can't tell you how glad I'll be when I can have the extra 250 a month to save for an emergency fund, and then a new car or house.(and when I say new, I mean 1 or 2 yr old car)

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