Conclusion #16: How To End Credit Card Debt Forever
“Cancel them all.” “Are you sure, sir? You might want to keep one open for emergencies,” pleaded the Chase Bank phone rep when I called to cancel my credit cards. “Yes, I’m sure,” I exclaimed. That was over 8 months ago when I made my last credit card payment.
You see me and credit cards have had long ten year history. Our relationship started in college, when lured by the free t-shirt and attractive bank rep, to sign-up for one. The relationship continued throughout college and into my first few corporate jobs. The credit was always there when I needed it – or thought I needed it. Turns out I never really had any real “emergencies” in that ten year period. Most problems can solved with a little bit of creativity and help from friends. Are tired of paying on credit cards? Wish you could get rid of them? Here’s what I learned in my year of paying off all my credit card debt…
#1 – STOP USING THEM!
Seriously stop. Take those cards and slice them up immediately. That’s what I did over a year ago and it made them impossible to use. Ending your addiction to credit is like getting off drugs or alcohol. If their just laying around course there’s going to be temptation to use. Engineer your environment so it’s impossible to fail. Your willingness to take this first step will prove how committed you are to this goal. If you aren’t willing to stop using credit then there’s a strong chance you’re not willing to pay off your debt.
#2 – Automate Repayment
As I mentioned in the beginning of this experiment, automate your payments. Paying bills manually can sometimes open the door for neglect. You might be telling yourself one month that you’d rather not make that payment. Computers aren’t emotional about money, so as long as you have money coming in, your banks billing service should be taking care of the rest. I’d even opt to get the money taken out of your checking account even before it hits your bank account if you can. Just keep earning income until your cards are paid off and the payments will take care of themselves.
#3 – Simultaneously Start A Small Saving Account
Financial security is the reason all of us feel we need credit. We say stuff like well what do we do if there’s not enough money for food or what if the car breaks down.. or what if…or what if. Remember that there was a time in history, about 50 years ago, where credit cards didn’t exist and people paid for things with the money they had or figured out some other way fix their problems. Start saving a little bit of money in a saving account and don’t touch it. This will be your credit card to yourself. If there is a real emergency you’ll have to money to pay for instead of using those credit cards you cancelled last year because you were smart and paid them off.. 
#4 – Systematically Reduce Your Bills
Last year I gave up a car, cell phone, buying books and most of my hygiene products for free or inexpensive alternatives. You can do the same. Can you sell your house and move into somewhere smaller? Can you sell one of your cars or even go car-less? Could you grow your own food? Is there something your paying for that you could get for free. Figure it out and apply the savings towards your payments.
#5 – Apply Any New Money To Your Payment
Last year I took my entire tax return and applied to my credit cards cutting the bill almost in half. Take any type of extra money…tax refunds, birthday money, inheritance, refunds, stuff you sell, a raise at work and apply it towards your credit card and you’ll have it paid off in no time. It may not seem like you’re making a difference, but every little bit counts.
#6 – Stop Buying Things On Credit
With the small exception of houses, most possessions such as cars, TVs, boats or whatever expensive toy that people buy now a days will decrease in value. So all the interest you pay on stuff you don’t need is to afford a lifestyle beyond your means. Stop buying on credit and start saving for what you need. The more stuff you buy, the longer you’ll have to work to pay for it. So less stuff = less work. Less work = more fun. It couldn’t be simpler.
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