Need a Resolution You can Stick to? Pay Your Down Credit Card Debt. Five Steps to a Debt-Free 2012

By Mike Peterson
In December 20, 2011

Maybe you overdid the holiday spending this year.  Maybe you’re planning on buying a house or a new car soon and you want to get your finances on track.  Or maybe you’re just tired of dealing with the stress and anxiety that comes with your monthly credit card statement.

Whatever the reason, if you want to pay down your debt in 2012, I’ve got a plan that can put you on the right track, no matter how much you owe.  Just follow these five steps and you’ll be on the path to a debt-free year.

Step 1:  Take Stock of Your Financial Situation

You can’t wipe out your debt until you know exactly what you’re dealing with. Once you know how much you owe and how much you can afford to pay every month, you’ll be able to come up with a long-term plan.

First, get all of your credit card bills together.  Look at how much you owe, and pay special attention to the interest rates on each card.  (Note:  you’ll want to concentrate on paying off the card with the highest interest first – but more on that later.)

Next, add up your monthly expenses – the “have-to” stuff, like your mortgage or rent, utilities, transportation, and grocery bills. Subtract your monthly expenses from your monthly income, and you’ll know how much money you have left over – this is the money you’ll be using to pay down your debt.

Step 2:  Call Your Credit Card Companies

If you’ve fallen behind on your credit card payments, it’s a good idea to get in touch with your credit card company – lenders are almost always more willing to work with you if they see that you’re at least trying to do the right thing.  You don’t have to give them a laundry list of excuses about why you can’t afford your monthly payments; just explain that things are tight and ask if you can get your minimum payment reduced.

If you’re on top of your credit card payments, call your lender anyway – ask if you can get a lower interest rate.  It doesn’t hurt, and chances are good that they’ll say yes.  Even if the reduction is small, it’s better than nothing.

Step 3:  Research Balance Transfers

Many balance transfer offers give you anywhere from a few months to more than a year of an introductory zero-interest rate on the amount of your original transfer – and that could mean big savings if you’re able to pay off your transfer relatively quickly.  If you’ve got a card with a very high interest rate, a balance transfer may be worth looking into.

Keep in mind, though, that most lenders charge a balance transfer fee,which is usually around three to four percent.  Also worth noting:  To be eligible for a balance transfer, you need to have pretty good credit.  If you’ve got a less-than-stellar credit history, you might not qualify for a balance transfer.

Step 4:  Make a Payment Plan (and Stick to it!)

After you’ve done all of your research, negotiated lower payments or interest rates, and applied for balance transfers, you should have a pretty good idea of what you’re working with, debt-wise.  Now, you can start to prioritize and pay down your debt.

I recommend starting with the card with the highest interest rate.  Decide how much you can pay on that card each month – it should be more than the minimum payment.  Continue to pay the minimum payments on your other, lower-interest cards.  Once the card with the highest interest rate is paid off, focus on the card with the next-highest interest rate, and so on.

Step 5:  Be Wary of Settlement Offers

There are a lot of scammers out there, just waiting to take advantage of people who are feeling overwhelmed by credit card debt.  Many so-called “debt settlement companies” promise to negotiate for settlements or lower monthly payments are just looking for a way to profit from other people’s financial woes.  A good rule of thumb is, if something sounds too good to be true, it probably is.  Paying off debt is a bit like dieting:  There aren’t any shortcuts if you want lasting results.  It takes discipline and work.

So there you have it – a five-step plan to being debt-free.  Of course, if you want more guidance or if you feel so overwhelmed by your debt that you don’t know where to start, you can contact the experts.  Visit or call 800-259-0601 today to learn how we can help you pay down your debt.

Happy New Year from all of us at!

Mike is the author of “Reality Millionaire: Proven Tips to Retire Rich” and he has been published in a variety of local and national publications including Entrepreneur Magazine, Deseret Morning News, LDS Living Magazine, and Physicians Money Digest. He holds a B.S. in business administration from the University of Phoenix.

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