5 Ways to Reduce Debt Without Cutting Up Your Credit Cards

Written by on September 22, 2012 in Money - No comments | Print this page


There’s plenty of old advice floating around that says if you want to get out of debt, you should just cut up your credit cards. While that creates a very strong mental image, the truth is that isn’t actually the best way to go about getting a handle on your debt. In fact, suddenly putting a stop to all your credit card use can actually have a negative impact on your credit score.

If you’re looking for more effective ways to get a handle on your debt, here are five tips that will help you out:

Know Exactly Where You’re At

One of the biggest mistakes people make when they decide to tackle their debt is not knowing exactly where they’re at. Instead of nailing down precisely how much they need to pay off, they just have a hazy estimate in their mind. In many cases, this form of denial is a type of coping mechanism. By not fully acknowledging the significance of their debt, they can downplay its impact to themselves.

If that sounds exactly like what you’ve done in the past, you shouldn’t beat yourself up about it. People do the same thing in regards to weight loss. While they want to slim down, they don’t pinpoint where they’re at and where they need to get. Once you acknowledge the importance of knowing your exact financial situation, you can sit down and start calculating exactly how much you owe.

Eliminate Non-Essentials

Once you run the numbers, you may be shocked by how much money you can save by eliminating non-essentials from your monthly spending. Since your current goal is to eliminate debt, you need to be as stringent with this rule as possible. While you can reintroduce reasonable non-essentials once you’re out of debt, now’s the time to exert some major self-discipline.

Sell, Sell, Sell

Although you’re probably going to be putting a costly hobby on hold, that doesn’t mean you have to sit around and stare at a wall after work. Instead, you can make selling all the excess stuff you have around your home your new hobby for the time being. By putting all those things around the house that you don’t actually need up on Craigslist and eBay, you can earn money during your free time without creating any additional stress for yourself.

Focus on One Battle at a Time

It’s best to identify your highest interest source of debt and then focus on eliminating it first. Once you do, you can move on to the second source on your list. Taking this approach will provide you with motivation and positive reinforcement as you completely eliminate one source of debt at a time.

Don’t Wait Until the End of the Month to Review Your Budget

Because you need to follow your budget to a T, it’s important to stay on top of your spending throughout the month. The best way to do this is by logging every cent you spend in an app on your phone. Making this a habit will keep you accountable and prevent you from inadvertently blowing your budget in the middle of the month.


This is a guest post.  Jeff Adcock is the president of credit card processing company Veritrans Merchant Services . Check out their website for more info.


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