If you read through any number of “credit card debt reduction” posts here, it will soon become akin to a broken record what the steps are to doing it.

So, let’s just very quickly review the basics.

Step 1: Figure Out How Much You Owe

Add up all your monthly expenses, including your minimum payments on your credit cards, mortgages, loans, and so forth.  Write this stuff down on a list or keep it in a spreadsheet on your computer.  That way, should you forget anything and a bill comes in the mail to remind you, you can add it to the list.  Also maintain a list of annual expenses, totalling in monthly expenses, so you have a total for your expenses for a total year.

Also keep a separate list of everything you owe.  For example, you might list your total credit card debt, the remainder of your mortgage debt, how much you owe on your car, and so on.

You want to be able to see, at a glance, how much money you spend monthly as well as how much money you owe in total.  As you pay stuff off, make adjustments so you always have a current, running total.

Step 2: Figure Out How Much You Have Incoming

In another list or spreadsheet, keep track of your income.  For most people, this will be the total of your paychecks for a month.

As with the first step, keep two lists.  Keep one with your regular income and another for additional income you may receive on a non-monthly basis—things such as quarterly interest payments, stock dividends, annuities, etc.

This will allow you to see your total monthly income as well as your total yearly income.

Step 3: Work Out a Payment Schedule

Subtract your monthly expenses from your monthly income.  If you have a positive number, you’re in good shape.  If this is your situation, take that extra money (the positive number) and figure out how to best use that money to pay down your debt.  By using that extra money, you can pay off your debts faster.  As debts get paid off, your monthly expenses will decrease as you no longer have to make payments on paid-off debts.  When that happens, you’ll have even more money to apply towards your other, remaining debt.

If, after subtracting monthly expenses from monthly income, you have a negative number, then subtract your annual expenses from your annual income.  If that gives you a positive number, then, at some point in the year, you are getting large payments that are offsetting your normal monthly losses.  If that’s the case, you need to take a closer look at those payments, and figure out how to better utilize them so as to cover for those months when you don’t have that additional income.

If both your monthly and annual expenses are more than your monthly and annual income, then you need to take a good hard look at your expenses to see what you can cut.  If you’ve already cut as much as you can, you may need to look at taking on an additional job or part-time work.  Other options are to call your debtors and see if you can negotiate lower interest rates or smaller payments to save you money that way.

The Bottom Line

Too many people just look at bills as they come in, sigh, and wonder how they will pay that, as they stick it in their “Bills To Pay” bin.  It’s not easy to do, and it can be discouraging at first, but writing everything down and developing a budget and a payment schedule can be a giant step towards managing your money and getting that debt paid off.

Being in debt is tough in ways beyond the debt itself.  While there are credit counseling and debt assistance organizations and companies out there who may be able to help, the fact is that many people are too embarrassed or protective of their privacy to use such services.

Fortunately, there are steps you can take on your own to develop a plan to reduce your debt.

Bear in mind that how you got in debt is important.  If you got into debt because you had bad spending habits, you need to address those habits.  You don’t want to get out of debt only to fall right back into your old spending habits and get into debt again.  So, any fiscal irresponsibility on your part is a problem you will need to fix to have any hope of a secure financial future.

On the other hand, if you got into debt due to circumstances beyond your control, such as unexpected medical or other expenses, while there is little you can do to prevent the unexpected, you can prepare as best you can by maintaining an emergency fund to help you in those types of situations.

Now, let’s get to work on your do-it-yourself debt reduction plan…

Step One: Write Down All of Your Expenses

The first step may be the most difficult and possibly depressing.  Grab a pad of paper and a pen (or create a spreadsheet on your computer) and start listing all of your expenses.  List everything you spend money on and how much is spent.  Include phone and utility bills, grocery shopping, gas, cable or satellite TV, Internet service, bank fees, newspaper, etc.

Don’t forget to include quarterly or annual expenses as well.  These may include things like license plate renewals, insurance, property taxes and so on.  You may wish to divide these amounts by 12 to include them in your monthly budget.  By setting aside funds each month for this purpose, you can be sure to have the money on hand when these bills come due, instead of scrambling for cash.

Total everything up so you have a figure for your monthly expenses.

Step Two: Write Down All of Your Income

The next step is to write down all of the money you make each month.  For most people, this is going to be based on their paychecks.  Just total up your monthly income and you’re all set.

If you have any sources of income that vary in amount, such as payments for freelance work or whatever else you may do for extra income, you can either use the average amount you make or only count the lowest amount you typically make in a month so you are basing your figures on a worst case scenario basis.  You don’t want to base your income estimates on optimism; you want to base them on cold, hard facts as much as you can.

Step Three: Let’s Do Some Math!

Subtract the amount of your monthly expenses from the amount of your monthly income.

If you end up with a positive number, you are doing well.  It means you should have extra money left over at the end of the month.  You can use that extra cash to pay toward your debt.  Don’t look at it as “extra” money you can go out and spend!

If you end up with a negative number, that’s not good.  It means you will need to spend less money or make more money, or possibly both.

What you want to do is to use this information to develop a budget for yourself to reduce your debt.  As soon as is possible, you want to end up with a positive number for your monthly income minus monthly expenses.  The sooner you reach a positive number, the sooner you will have excess cash on hand that can be used toward paying down credit card debt.

The Bottom Line

Don’t just read this and not act upon the information you have learned here.  You might think you can just guess at it and not have to write anything down, but that’s where a lot of people make their mistake and end up with wildly different estimates for their monthly expenses and income.

That kind of mistake can end up costing you more.  That is why it is better to have it written down on paper.  You don’t want to have to rely on your memory as to whether or not you already included one item or another when estimating in your head.

Even if you’re buried under a pile of credit card debt, it is never too late to take control of your finances.  Many people are realizing their fiscal habits have not served them well, and are taking a good hard look at how they handle their money and their credit.  Of course, it can be discouraging to be more financially responsible while seemingly not making so much as a dent in your debt.  It can result in many people giving up and reverting to their old habits, which can get them in even further financial difficulties.

It will be a big boost to encouraging new habits if you can get your existing debt paid down and under better control, so that you get that all-important positive feedback for your new fiscal discipline.

So, let’s take a look at some ways to reduce your debt rapidly.  Bear in mind, however, that, once you use this strategies, you will need to continue to maintain your discipline with your money so that you don’t fall back into debt again.  These are strategies that, while effective, may not be practical to repeat again and again if you keep falling into debt.

Once you get out of debt, do everything you can to stay out!  Do not allow yourself to fall back into your old spending habits.

Now, let’s look at these three ways to rapid debt reduction.

Get More Money Coming In

It sounds tough, but it’s not impossible.  One problem is that too many people simply dismiss the idea as impossible and don’t consider it further.  But, there are many ways that you can get more money and, hopefully, one or more of them will work for you.

Getting more money doesn’t necessarily require taking on a second job or anything like that.  If you can reduce your regular expenditures, that can be equivalent to adding more money to your budget.  It may not give you as much money as a part-time job, but it can provide you with extra money you can use to pay off your debt.  Every little bit helps, because small amounts do add up!

If you cannot find or take on an extra job, you can also look at selling things.  Do you really need everything that you have? How many of those things around the house are the very same purchases that put you into debt?  Which is more important to you, holding on to those things or paying off your credit card debt?

Most people don’t end up with large credit card debts because they bought big ticket items; a lot of people wound up in debt by spending a little bit at a time.  It’s way to easy to justify a small purchase, because it’s only a small amount.  But, do it too often, and throw in interest charges, and it gets out of control fast.

So, conversely, you can also pay off your debt a little at a time.  Though we are interested in rapid debt reduction here, that doesn’t mean you should forego other opportunities to save—every little bit helps!  And, once you start increasing the amount you pay on your debt, even if only by small amounts, you will see that debt come down faster than it otherwise may have.

You can also consider selling any investments you may have, such as stocks, bonds, real estate, and so on.  If, for example, the interest rates you are paying on your credit card debt are higher than the interest you are being paid on your investments, you will likely be better off selling those to pay off your debt rather than see your debt’s growth outpace the growth on your investments.

You should, of course, discuss a potential sale of investments with your accountant, financial advisor or other professional, especially with regard to figuring out whether any tax penalties will apply and which way be the best way to pay off your debts.

Call Your Credit Card Company

People often overlook this.  With the economy such that it is, and so many people in default, it may be easier than ever to negotiate better rates for you.  It’s better for them to make a little less money than to make none at all.

A lower interest for rate on your debt will help you pay it off faster.  It will mean that more of your payment amount is applied to the principle on the debt rather than the interest on the debt.  That will help you get that debt paid down faster too.

Debt Consolidation Loans

Another option is to consolidate your various debts into one loan.  This can give you one payment to worry about, rather than multiple payments, and a reasonable interest rate that may serve you better than assorted interest rates scattered across multiple debts.

You should, of course, research debt consolidation loan firms carefully before making a decision.  It may also serve you well to discuss this with your accountant or other financial professional.  Make sure you deal with a reputable firm and that you fully understand the terms and ramifications of a debt consolidation loan before you pull the trigger on getting one.

Of course, don’t turn around and start maxing out the credit cards you paid off with your debt consolidation loan.  You’ll only end up making things worse for yourself.

As part of getting a debt consolidation loan, you should also develop a detailed financial budget so that you can manage your money better and stay on track with making payments on that loan.  If you can do that beforehand, and get into the habit of following your budget and staying on track with your budget, that will serve you better in the long run and can help you avoid falling back into debt.

The Bottom Line

These strategies can help you reduce your debt rapidly.  How rapidly?  Well, that all depends.  However, don’t disregard them because they aren’t overnight solutions!  The sooner you get started on doing something to reduce your debt, the sooner you can be rid of it!

If you’re buried under credit card debt, it may be difficult to think of any goals outside of paying off that debt.  However, as you work on paying off your credit card debt, you can also work toward achieving your goals.  Think of the debt as one of the bumps along the road to your success.

Additionally, keeping a focus on achieving those goals can also help you in paying down your debt.  It can help keep you from getting distracting by schemes that may promise you big money but ultimately throw you off track and impair your ability to pay your debt and reach your other goals.

Step 1: Start with Your Goal(s) in Mind

The first thing you need to do is to fully define your goals.  Imagine yourself and your situation as you want it to be one year, five year, ten years from now.  In these planning stages, go ahead and daydream a little bit.  Visualize that future for yourself.

Write down where you will be and what your life and lifestyle will be like.  Will you have a big family? A fancy house?  Will you live in the same area you live now, or will you have moved elsewhere?

What are your passions?  Collecting sports cars?  Traveling the world?  Gardening?  Raising exotic animals?

How will you spend your downtime?  Will you go to lots of plays or sporting events?  Or will you spend the time poolside in your backyard?  Will you eat at fancy restaurants, or have a top-notch backyard BBQ?

Be clear in your goals.  Don’t just say you want a “big house” but define what you mean by big.  What is big to you?  Three bedrooms?  Five?  Ten?  Do you want a 2,000 square foot house?  Or, maybe to you, 10,000 square feet would be big.

And so on.  The more clearly you can define your goals, the easier it will be to develop a plan that will keep you on track with meeting those goals.

After you consider where you will be, begin to formulate a plan to get yourself there.

Step 2: Develop a Plan

Work on figuring out steps to get yourself to those goals you set out for yourself.

Again, be as specific as you can.  Naturally, among your goals will be paying off your credit card debt.  How will you get the money to do that?  Will you work additional hours at the office?  Will you cut expenditures in other areas so you can apply more to your debt?  Will you take a part-time job?  Will you offer services online or sell some of your stuff on online auction sites?

Make these plans specific.  If you plan to save money, how much?  How much money will you set aside each week?  Twenty-five dollars?  Fifty dollars?  One hundred dollars?  Or, maybe you’ll set aside a percentage of your take-home pay, like 10% or 15%.

It will, of course, be beneficial to also develop a budget for yourself, and make sure you stay on budget and on track with your goals.

Setting some timelines will also be beneficial.  When do you want your credit card debt paid off?  When do you want to be able to buy that big house?  Once you work in some timelines, you can work backwards from that goal in order to better plan what you need to do now to get there.

Step 3: Implement Your Plan

As part of implementing your plan, weed out your needs vs. wants.  What do you need to reach those goals versus what you want?  For example, if you want a big house and aren’t that into fancy cars, there’s no sense buying a fancy car just because you may come across a good deal in the meantime.  Is that fancy car something you need to reach your goal, or just something you’d like to have?  If the latter, pass it up so that you don’t get thrown off-course!

And, even if that fancy sports car is a part of your future goal, what will buying it do to your plan?  Do you have a garage suitable to store it?  Can you afford the maintenance?   Will buying it now, even at a cheap price, be a good deal in the long run?  Or, will the extra costs delay your goals even more?  If it delays your goals, don’t buy it just because you want it now; instead, stick to your plan and buy it later, when you can afford to both buy and maintain it.

Don’t let the argument that “this is part of my goal” cause you to spend money unnecessarily.  It can be hard to let a perceived opportunity slip by, but it may be necessary sometimes.  For example, if you spend $1,000 on something, that’s $1,000 you won’t be applying toward paying your debt.  And that means you’ll end up paying more in interest rates.  And, if that happens, how much did that $1,000 purchase really cost you?

Also, when considering your goals, consider the type of person you will be when you achieve those goals.  Will you be more confident?  More sociable?  More outgoing?  Why wait for success to be that person?  You don’t need to spend money to be more confident.  You don’t need to spend money to be more sociable.  You don’t need to spend money to be more outgoing.  Changing your attitude doesn’t cost you, so be that successful, confident person today!  Doing so may even help speed you along to reaching your goals.

The Bottom Line

Too many people don’t plan at all.  And, when you don’t have a plan, it can be hard to move forward.  Often, you might think you have a plan—it’s just all in your head—but the truth of the matter is that, if you go to write that plan down, you may just find you don’t really have much of a plan at all!

If you want to improve your chances of paying off your credit card debt, if you want to improve your changes of reaching your goals, then develop a plan, implement that plan and stick with that plan.

If you’re struggling with credit card debt, you probably want nothing more than to live debt free.  While that may not be possible at the moment, you can still embrace strategies for debt free living in order to better manage your money (and get that credit card debt paid off!) and to make sure you don’t get deeper in debt.

So, let’s jump right in and take a look at four strategies for debt free living.

Pay Off Debts as Soon as Possible

Make more than the minimum payments whenever possible.  The more you can reduce what you owe, the less interest you will have to pay, and the sooner you can get the debt paid off.

If you encounter situations where you must use your credit card, pay those new charges off as soon as possible too.  A good strategy would be to pay the minimum amount due on your credit card each month, plus the costs of any new charges you made, plus as much more as you can afford to pay.

For example, let’s say your minimum payment is $100, you put $75 in new charges on your credit card for the month and your budget leaves you with an extra $155 of spendable cash.  In that case, pay $255 on your credit card.  That covers the $100 minimum, plus the new charges of $75, plus an extra $80.  By doing that, you can keep the balance going down in larger amounts—which means you can get it paid off quicker—than you would if you only made the minimum payment.

And, of course, once you get your credit card paid off in full, pay off any new charges you make each month and don’t carry a balance.  (If you cannot afford to do that, don’t buy new stuff with your credit card!)

Prioritize Wants vs. Needs

When it comes to making purchases, you need to separate your wants from your needs.  For example, you might want a brand name cereal, but if the store brand is cheaper and just as good, that may be all you really need.  You might want a video game system for entertainment, but if all you need is something to pass the time, you might be better off buying a deck of cards or a book to read.  Similarly, instead of buying a steak, settle for hamburgers.

Of course, you need to be careful too and not just buy the cheapest thing.  Sometimes, the least expensive product might end up being the most expensive in the long run.  Let’s say you need a new washing machine.  You may want a high end model, but you really only need a basic model.  However, even among the basic models, there will be various selections.  The cheapest one is not necessarily the one you should buy.  There’s no sense buying a cheap model to save $50, if it ends up breaking down sooner and you end up needing to repair or replace it in a couple short years.

Make sure you do some research to make sure you are buying a good product that will last for years.  You’ll be better off spending that extra $50 if the more expensive model will last twice as long before it needs to be repaired or replaced.

Maintain an Emergency Fund

Whenever possible, you should set aside money and save it in an emergency fund.  This could be a separate savings account at your bank or it could be as simple as a shoebox you keep in a secure location.

We often run into situations where we need money beyond our usually expenditures.  Maybe your car needs to be fixed, or you need to repair your roof after a storm, or maybe you, a family member or a pet will have a medical emergency.  You never know what may happen in life, but, if you have an emergency fund, you can be prepared for those situations and be able to cover them without breaking the bank or putting yourself further in debt.

Do your best to ensure that your budget includes setting aside money in an emergency fund.

Be Creative in Living on the Cheap

Always be on the lookout for new and different ways you can save money.  If you normally spend $50 on a night out, try to have a night on the town for only $45.  Clip coupons, watch for sales and look for bargains.  When grocery shopping, look for store brands, consider less expensive alternatives and consider buying often-used products in bulk.  Check prices to see if different food options might save you money.  You don’t have to just look for alternative brands—you can look for alternative foods as well.  For example, if you normally but spaghetti, look into ramen noodles to see if that would be cheaper.  Or vice versa.  If you normally spend $200 on groceries, try spending only $180.

And so on.

Always be trying to reduce what you spend.  You could even make a game of it.  Keep a scoreboard at home.  Score points for reducing expenditures.  If you have a family, get the family involved.  Give points for suggesting ideas that save money.  You can teach your kids to live debt free by example and with your game play.  So, maybe when they get their own credit cards someday, they will be well-prepared to avoid getting into debt with them.

The Bottom Line

You don’t have to be debt free to actually begin living a debt free type of lifestyle.  By doing so, you can help get your credit card debt paid off sooner while at the same time practicing new spending habits which will help you stay out of debt once your credit card debt is paid off.

Don’t wait!  Start a debt free lifestyle now!

Credit card debt can become a major burden, both financially and emotionally.  Every time you look at your credit card statement, you wish that you could have it paid off and be done with it.  If it’s especially high, receiving the credit card bill each month can be quite stressful.

But, how can you tackle that debt and eliminate your credit card debt?

Unless you happen upon a lump sum of cash you can use to pay it off, you’re going to have to take it one step at a time.  Here are some ways you can work towards eliminating that debt.

Ask for a Lower Rate

Many people neglect to do this, or know that it’s even an option.  You can call your credit card company and ask for a lower interest rate.  If you’ve been paying your bills on time and paying at least the minimum each month, point that out.  If you’ve been struggling to pay on time or to pay the minimum amount, indicate that you would have an easier time doing so if the interest rate were lower (if that is true, of course).

They may decline to lower your rate, but they might agree to it as well.  You don’t know until you ask.

Stop Spending Money

Of course, the obvious choice is to stop buying things and putting new charges on your credit card.  Sometimes, it doesn’t feel like that’s an option, however.  Something comes up and you need to put it on your credit card.  You don’t feel you have a choice.

But, you do have a choice.  If you keep putting new charges on your card because you absolutely need to charge it, eventually, you will reach your limit and you won’t be able to charge anything else.  At that point, when something comes up that you need to spend money on, you will have to come up with an alternative to using your credit card, since that won’t be an option.

So, instead of charging it to your credit card, come up with that alternative now.  Unless you know that you will have the money when the bill comes due to pay the excess amount you needed to charge, don’t do it.  And, be absolutely sure you will have that money; wishful thinking is not the same as certainty.  If someone owes you money and you know you can count on them to pay you before the bill is due, that’s one thing.  If you’re hoping that someway, somehow, you’ll have the money in hand before the credit card bill is due, that’s just wishful thinking.

Don’t put any unnecessary new charges on your credit card!

Also, take a look at any recurring charges you may have.  For example, are you being billed each month for a gym membership you never use?  Cancel it.  Do you get billed for magazine or newspaper subscriptions?  Do you really need them?  Look at what recurring products and services you can do without.

Consider alternative means to pay those recurring charges too.  Can you write a check each month instead of having it automatically charged to your credit card each month?

Add up whatever recurring monthly charges you have.  Make sure that, each month, you can pay at least the minimum due on your credit card (preferably more than the minimum!), plus the costs of any recurring charges plus any other new charges you have made.  If you cannot make that large of a monthly payment, you need to make more cuts in your spending habits!

Create a Budget

While you are looking at all those recurring charges, put together a budget.  Figure up how much you earn each month, and where the money goes.

From there, work out how much you can pay on your credit card each month.  If you pay only the minimum, it will take you a long time to pay off your debt.  You want to make more than the minimum payment.  The more you can pay, the better off you will be.

If your monthly expenses exceed your monthly income, you need to make more spending cuts.  You need to eat, but do you really need cable or satellite TV?  Consider cancelling your cable or satellite television service, at least until you can afford them again.  See if you can rent DVDs from your public library.  Cut anything you don’t really need.

Make Extra Money

Making extra money to pay off your credit card debt may be harder than it sounds, but it is something you should look into.  Can you find a second job—a part-time job—so you can use that extra income to apply toward your debt?

If you can’t find a formal part-time job, how about starting your own part-time business?  Are you handy with tools and making repairs around the house?  You could offer that as a service to people.  If you’re good at golf, maybe you could offer golf lessons to new golfers.  If you’re good at writing, you could try offering article writing services to local businesses or online.  Consider the things you do well and how you might be able to put those skills to good use to earn extra money.

Perhaps you can have a garage sale—maybe sell some of that stuff you accumulated by charging them to your credit card!  If garage sales are not your thing, try auctioning your excess goods on eBay or other auction sites.

The Bottom Line

The bottom line is that you need to do something to eliminate your credit card debt.  You may not be able to pay it off overnight, but, if you work toward eliminating it one step at a time, you can end up paying for it sooner than you might have imagined.  Even if you can’t pay it off all at once, you’ll still have the satisfaction of seeing your credit card balance go down each month instead of staying the same or, worse, increasing.

Take charge of your credit card debt and take a few minutes to do some of the things mentioned above.  You will be glad you did.