It’s Valentines Day and you are probably checking to see if your credit card can take the brunt of your expenses for the day. If you think about it, today, you will probably spend more than you have spent in the last few weeks. What the heck, it is a special day and you want to treat yourself and that special someone, right? I kind of think the same way but I cannot help but think about my credit card debt as well.

I want to spend but I do not want to be in debt for the rest of the year, though this looks likely when I look at my credit card statements. I ran across this very useful and hopeful post from Motley Fool on how to slash you credit card debt in four steps. I thought I’d share them with you.

Prioritise
The first thing that you have to do is get all your bills together and rank them according to priority. When it comes to credit cards, you can easily determine which ones should be paid off first – just look at the interest charges and the late payment fees. The ones with the highest figures should be paid off first. If you only have one credit card, then good for you – you only have to pay off that one bill.

Negotiate
A lot of people do not do this step because they do not know that you can actually negotiate for a better deal. The fact is that even if your credit rating is not perfect, you might actually get your creditors to help you out – even just a little bit. The best approach would be to call them up and see what can be done. Lay down your cards on the table and ask for lower rates if possible. If this does not work for you, then you may want to consider transferring credit card balances to another credit card that offers lower rates. There are actually offers right now which will allow 0% on balance transfers.

Snowball
When someone says snowball in relation to debt, I get nervous. My idea is automatically negative – snowball effect of debt, you know. However, the snowball effect that is being referred to here means that you pay off your debt in baby steps and then the whole process snowballs. For example, you pay off the minimum amount now and then add more when your next paycheck arrives. Assuming that you will not be adding more debt to your credit card, then the more payments you make, the easier it will be to get rid of your debt as time passes.

Maintenance
This is the easiest step, I think. Once you are deep in the habit of paying off your debt on a regular basis, you should be able to maintain it and then see your debt dwindling away to nothing. Of course, over time, you may be thrown off track because of financial emergencies, but it is no reason to panic. You may be set back for a while but if you are persistent in paying off your debts, you should be back on track soon enough.

This entry was posted on Thursday, February 14th, 2008 at 2:09 am and is filed under Debt, Budgeting, Credit Cards, Personal Finance, Advice . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.