Paying Off Credit Cards - 5 Steps to Financial Freedom

Paying off credit cards is a goal that is shared by many Americans. Debt is like a vulture that hovers over you, never relenting in its quest to attack you with high and monthly compounding interest. There are a few ways that you can get out of debt, but wishing it away will not do you any good. Below are the top 5 ways to get out of debt:

1. Pay as much as you can, not the minimum

This may be one of the most important tasks you can partake in to escape debt’s grasp. It will take years and years to pay down your debt if you only pay the minimum amount each month. Even if you must sacrifice some of your luxuries, allocating as much money to pay your debt down each month will work out for you in the end. If your minimum monthly payment is $75, then you should try to pay around $200. This will go a long way toward paying down your debt quickly and your will save a lot of money in foregone interest charges as a result.

2. Push you high interest debt around

Take a look at all your credit cards and look to see if you have one with significantly lower interest than the others. You will want to transfer your high interest debt to the lower interest card as soon as you can to begin saving interest each month. This method of throwing your higher interest debt onto lower interest cards is called “snowballing”. As time goes on, you end up with more available cash to pay down your debt because of the reduced interest that you are paying.

3. "86" your savings account

This may seem odd, but when you have high interest debt to pay down you need to liquidate anything you can. You are actually saving money long-term by cashing out your investments and savings to pay down your debt. Since the average credit card interest rate is 18%, you would have to be making more than that from your savings and investments in order for it to make sense for you to keep your money tied up.

4. Borrow against your life insurance

If you have a life insurance policy with cash value, then this little-known option may be right for you. While you are borrowing your own money, the interest rates are very low. Repaying this loan is very important, however. If you were to die before your time, the unpaid loan balance would be deducted from the amount your loved ones would receive in benefits.

5. Haggle with your creditors

If you are on the verge of bankruptcy, then talking to your creditors is a great step to take. Interestingly enough, creditors really do not want your to file for bankruptcy. They would rather get some of the money you owe them than get nothing at all.

Paying off credit card debt can be a tough task to accomplish on your own. If you do not feel comfortable doing this on your own there is a very good organization that offers FREE help.