Living Frugal
How will I ever pay off this credit card debt?

How are you going to pay off all this credit card debt?

Unfortunately, it took a long time to get in this much debt and it's going to take a while to get out.

The current economy is really scary. Each day we turn on the news only to find out another company has laid off another thousand employees. The employees that are left are forced to do more with less, to work more hours for the same pay.

Our government is printing more money in an attempt to prop up the economy which will eventually result in inflation that will impact all of us.

Groceries are going up, gas is outrageous and medical costs have skyrocketed.

The average American owes at least $15,000 in credit card debt which puts you under even more financial pressure.

The only way to have peace of mind is to get control of your finances and pay down debt. If you have debt, you constantly live in worry thinking what would happen if you're the next one to lose their job.

Getting out from under this pressure involves you paying down your credit card debts one by one, step by step. It will take you being diligent and some determination but it can be done.

It's so easy to let keeping up with the Jones' take control of your finances. You wind up with massive debt and before you realize what happened, you hit your debt ceiling.

Don't beat yourself up. You are not a stupid person, you just made some bad choices. Every time you swiped a credit card, you decided to borrow money you did not have.

When you received the first bill you couldn't pay in full, that's when the trouble started.

Help, I can't afford my mortgage - Are you underwater and can no longer afford to make the mortgage payment? Find out your options for avoiding foreclosure.

Before you begin the journey to become debt free, you must whole-heartedley believe that your life does not have to continue down this path.

There are many people who are living free of debt and there's no reason that you can't be one of them.

You have the power to get yourself out of debt by living frugal. You learn to stretch what you have, pay off the debt you have accrued and start saving towards your future.

Should You Walk Away from Your Mortgage?

If you are in debt, the first step you want to take is to start paying off your credit card debt. This is one of the biggest mountains to climb when you decide to start living frugal.

The unfortunate part is most credit cards have a high interest rate. If this is the case, you may want to see if you can take out a lower interest rate loan to pay off the credit card.

Absolutely, under no circumstance should you ever take out a home equity line of credit to pay off credit card debt.

If you default on your credit card debt, the worst the credit card company can do is take you to court. If you default on your home equity line of credit, you lose your home.

The decision is entirely up to you but if there's any doubt in your mind that you may not be able to pay your home equity line of credit, do not take this route.

Saving a couple of thousand dollars in interest is not worth losing your home.

If you're one of the lucky ones and do not have a huge credit card interest rate, start by making the majority of your debt payments toward that one card.

When the first card is paid off, move on to the next card and pay towards it in the same way.

Now you may be thinking that this will cut into your "entertainment money". What you should realize is if you have more debt than you have money, you don't have any extra for entertainment.

You should be putting every extra penny you have towards paying off the credit card debt.

The goal is to take back control of your finances. Each time you pay off a debt, that relieves you of one monthly payment that you can apply to another debt. You repeat this process until you are left with one debt payment.

In the financial world, you'll hear this referred to as snowballing debt. The amount of money you allocate for each payment grows larger as each debt is reduced.

Snowballing is the most effective way for you pay down debt and start living debt free.

To sum it up, you must set your mind to the fact that your finances are in trouble if you don't get back on the right path.

The next step is to identify what debts to pay down first and start applying every extra penny you have towards your debt elimination plan.

Living Frugal Tips for reducing your credit card debt:

1. Don't use a credit card to pay for things that are consumed quickly like meals and vacations. If you can't pay cash for a meal, eat at home. If you can't afford to pay off the monthly credit card bill at the end of the month, you can't afford that vacation you just took. There's no faster way to fall into a mountain of debt than by using a credit card recklessly and without care. If there's something you really want, save for it over a period of time and avoid the interest charges. Now that is smart money management - living frugal.

2. Pay off your highest interest rate debts first.
This is your debt elimination program. You want to pay down the balances on high interest rate loans or credit cards first. Once the high interest rate debt is paid off, you can tackle the next highest. Once you can get these debts under control, living frugal starts becoming easier and easier.

3. Pay more than the minimum payment.
If you pay the minimum due on the credit card bill, you'll barely cover the interest and pay mere pennies on the principal. This is how you fall into the trap and stay in the trap. Pay enough to start knocking down the principle on the debt - resulting in less interest charges and more dollars going toward the principle next month.

4. Do not borrow against your home to consolidate debt.
If you are looking to consolidate debt, absolutely do not borrow against your home. You will always need a place to live and never, ever consolidate credit card debt against your home. You would be better off to take out a 401K loan. The interest on the 401K loan most times results in interest that you pay yourself, back into your 401K. But be careful with this also, you don't want to fall short of your investing goals at retirement.

5. Have an emergency fund.
You need a cash cushion of at least 3 to 6 months of living expenses in case of an emergency or an unexpected job loss. If you don't have an emergency fund, a small crisis could seriously upset your finances. Frugal Living won't be enough in itself to save you if you don't have an emergency fund.

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