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11 Tips to Shrink Your Credit Card Debt

By Eva Norlyk Smith, Ph.D.
May 22, 2009
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High interest debt will keep you in the poor house forever, so do everything you can to get rid of it. Paying a little more each month is one of the best ways to shrink your credit card debt. Because of the savings on interest charges, each dollar you save to pay down your credit card debt faster can more than double in value.

Here are 11 tips to free up money each month to pay down your high interest credit card debt faster.

1. Get out the ax. Take a close look at where your money goes. Are you signed up for any monthly subscriptions services you can do without? Let them go. Weekly DVD rentals or Netflix subscription? Use your library card—you can get DVD’s for free. Online subscriptions? Cancel them. And that $40/month gym membership? Find a community center in your area—most are free or inexpensive; or simply get out your running shoes and hit the road.

2. Leave your credit cards at home. Credit cards are great for business, but not for consumers. Studies have shown that people spend upwards of 15% more when they carry their credit card with them. Don’t. By leaving your credit cards at home and paying by cash or check, you’ll avoid temptations, and it will be a lot easier to curtail purchases and meet your budget.

3. Let go of the latte. Okay, we may not all be high-end java junkies, but we each have our guilty treats: Happy Hour drinks, chips and a Coke, doughnuts, and so on. A $3-4 purchase may not seem like much, but it adds up: $15-20 for a five-day work week, $60-80 a month. That’s money that you could otherwise use to pay down your credit cards. Take a look at your habits and see which extras you can let go.

4. Make a list and check it twice. The less you go shopping, the less you spend. Try to go grocery shopping only once a week. Make a list of what you really need, and then stick to it. If you need something during the week, make a quick trip, and buy only the item you went there for. You’ll be surprised at how good you can get at using everything in your fridge.

5. Cook your own meals. Bringing your own lunch will cost you only $2-4, and it’s usually healthier too. Cooking at home more frequently can save you hundreds of dollars each month, depending on how often you take-out or eat out. Put the savings towards zapping that credit card debt.

6. Slash your utility expenses. Next to rent and mortgage, utilities are one of the highest budget items for most people. Get a programmable thermostat, which can cut your heating and cooling bill by 10-20%. The typical American home has upwards of 40 appliances constantly drawing power. Learning how to cut your standby power costs can slash as much as 10% off your monthly bill, which you can use to pay down your credit card debt.

7. Zap those phone bills. Look for ways to bundle your phone, Internet and cable services—going with just one provider can save you up to $50 a month. Take a close look at your cell phone plan, are you using all the minutes you have? If not, downgrade to a cheaper plan. If your plan is due for renewal, shop around for a better deal.

8. Reduce Other Loan Commitments. If you have a second car with a car loan, consider downgrading it to an older, reliable car that you can buy without a loan. If you have student loans, look into consolidating them to lower your monthly payments. Alternatively, find out if you’re eligible to defer your student loans.

9. Raise your car insurance deductibles. Save money on your insurance premiums by increasing your out-of-pocket outlay from $250 to $1,000 for both your first and second car. This can save you 15% or more off your premium. And while you’re at it, shop around for lower auto insurance rates.

10. Use your tax credit to pay off your credit card debt. As part of the 2009 stimulus package, 95 percent of workers will get a tax credit. Effective in June, this will begin showing up in your paycheck as an extra $12-14 a week in take-home pay. For two-income families, that amounts to an extra $100 a month. Use it to shrink that credit card debt.

11. Keep track of how you spend your money. Studies show that people spend less when they look at their expenses in detail. Keep a notebook and pencil with you and write down even small cash outlays—you’ll be surprised how it all ads up. Sign up for online community money management sites like, or These sites contain free tools to help you track where your money goes, budgeting tips and community advice specific to your spending patterns with tips for saving even more.




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