Getting out of debt is easy if you have money flowing in but there are a few things you need to do in order to attack that debt.  You’ll have to take action, which one most debt attackers don’t do and you’ll want to work your butt off.  It takes money to make money.  Here’s a simple debt reduction plan that you can take in order to pay off your unwanted credit card bills.

Step 1:  Learn your lesson.  As dumb as this sounds, it’s true.  If you’re in bad debt right now, I don’t even want you to use a credit card.  Instead, I want you to use cash and cash only.  Using cash is the best way to avoid debt.  If you find yourself spending way too much in a store, simply bring in what you want to spend.  So, if you only want to spend $20, bring that amount into the store.  Don’t bring a credit card, nothing.  Just bring $20!

Step 2:  Write down every credit card bill.  The next step you want to take is grab every bill that is forcing you to be in debt.  Whether it’s school loans or credit card bills, we are going to write down the interest rate and how much each bill is total.  Here’s an example you can follow:

  • Credit Card #1 – $7,500 – 11.99% APY
  • Credit Card #2 – $3,000 – 14.99% APY
  • Student Loans – $15,000 – 6% APY
  • Our Total:  $25,500

Step 3:  Balance Transfer.  If at all possible, try and get a balance transfer with as many cards as possible.  It’s probably going to be hard to get a card with a $25,000 limit but if you can find a 0% for 12 months, do this ASAP.  This way you can pay no interest for the 12 months, this is when we will attack the debt.

Step 4:  Backup Plan.  If you can’t find that balance transfer card, you’ll want to attack the highest interest card first and put as much as possible toward that card.  So, in our example, we will want to throw as much money as possible toward the student loan, while paying the minimum on the other credit cards.  NEVER miss a payment on any of your cards, you won’t want to make your credit worse.  Here’s our example to show you:

  • Monthly money coming in:  $3,000
  • Monthly expenses:  $1,800
  • Leftover Cash:  $1,200

*pay the minimum on the 2 credit cards and put the remaining toward the loans (remember to leave a little for yourself)

Step 5: Bring in the money.  Working a full-time job stinks, I know but if you’re not working more than 60 hours a week, get at it.  If you’re serious about this debt, you’ll want to attack it hard.  Start delivering pizzas, working retail, anything to bring that extra $200 in a week.  It all helps!  The more you make, the less you’ll have in debt.

There you have it, that’s our simple reduction plan.  If you follow these steps closely, it shouldn’t be hard to attack your debt.  Living debt free is great and make money for your retirement instead of spending it.