Attack Your Money Resolutions In The New Year

Many of us open up our credit card statements with as much excitement as when we step on the scale--especially after the holidays. But if we take a few simple, disciplined steps, we can reduce our debt.

Credit counselors at our Consumer Credit Counseling Service (CCCS) offer the following tips to dig oneself out of debt, one dollar at a time:

Stop charging. It may seem obvious, but if you are already in debt, your first step is to stop charging altogether. It’s totally unrealistic to hope you can become debt free while still using credit. Pay only with cash, check or debit card.

Create a “get out of debt plan,” starting with a written budget. Compare your net monthly income with your total monthly expenses (including proportionate periodic expenses). How much do you need to cover your basic expenses like rent, food, the car payment and utilities? Include a specific plan to pay off your holiday credit card debt in one, two or three months. If you need assistance creating a budget, meet with one of our CCCS counselors who will help you develop a budget and provide you with a free Guide To Financial Freedom booklet with step-by-step instructions.

Cut back on living costs and increase your income by:

• Taking your lunch to work
• Eating in and not ordering out
• Shopping with a list to prevent impulse buying
• Watching for grocery sales and using coupons
• Having a yard sale
• Taking a part-time job

For more detailed suggestions, please see the Ways To Save section of our site.

Tackle your highest interest credit card debt first. Continue to make the minimum payments on all of your cards, but add additional funds from your budget to pay down the highest interest rate card.

Find a lower-interest card. Shop around for a better deal on your credit card. Some cards will offer you 0% interest for up to a year for new balance transfers. But beware: do this only if you actually plan to pay off the debt before the introductory period is up. Otherwise, you may get stuck with another high interest credit card after the trial period. Shop for the lowest interest-rate cards at www.bankrate.com and at Consumer Action’s credit card survey at www.consumer-action.org.

Set specific financial goals. The more specific your goals, the more successful you will be in achieving them. Would you like to pay off your holiday debt in two months? Or is your goal to reduce your overall credit card debt by a third in six months? Whatever your goal, set a timeline and amount to it, then make a plan to achieve it.

Start planning now for next year. Open up a holiday account at your financial institution in early in the year for next December. You can set aside as little as $20 each paycheck. Or, divide the total amount spent on the holidays this year by 12 and try to save this amount each month this year.

If you’re not able to gain control of your credit card debt, get help from an established non-profit organization, such as our CCCS. It doesn’t cost anything to meet with one of our counselors for a credit counseling session. Call (888) 656-CCCS or start the process online.