There it is again. That ugly four letter “d” word that seems to loom over you every day. According to a CBS Money Report  in August 2012, the average consumer credit card debt is hovering just below $5000. With a minimum payment of $100, or 2% of the card balance, and an interest rate of 9%, that would take 16 years to pay off! Add that on top of any other debts that you may have, and whoa! Things seem to be out of your control. With a little planning and a lot of effort, you can take back control and give debt the boot.

 Get Organized

It is hard to get started on a project when you do not have a clear picture of what is going on. To do so, it is important to know exactly what you owe and to whom; as well as what you spend each month. Gather up all of your debt information and begin making a list that includes: the debt item; payment due date; minimum payment; interest rate; and payoff amount. Next, examine your spending habits. Are there areas of spending where you could cut back? Are there habits that you notice which helped contribute to the accumulating debt?

Focus on One Debt

After seeing exactly what you owe, determine which debt you would like to focus on first to pay off. Hopefully after looking over your spending plan, you noticed some areas you could trim back and use that extra money to go towards one of your debt payments. While you are focusing on one debt, continue to pay the minimum payments on the remaining debts. When you focus on one debt at a time, you will see results much faster than diluting your efforts across many items.

Deciding which debt to pay first will be up to you. Would you rather see a faster result to get some momentum going? Or would you prefer to save money in the long run? Paying off the debt with a lower balance first will be rewarding rather quickly. On the other hand, paying off a debt with the highest interest rate first will save you money in the long run. Most of your payment is going towards that high interest rate. Getting rid of that debt means less money in interest. However, this could also be your largest debt and may take some time to pay down.

 Put Extra Money to Use

Once that first debt is paid off and you had a chance to celebrate, put that money to work! To really rev up the debt attack, use the money from the paid off debt to go towards your next debt that you are focusing on. This creates a type of power payment. As you go down your list of debts and pay them off, continue rolling the payments from the old debts to the new one. You will be amazed at how fast you can pay down a debt.

 Be On Time

Now that your debt payment plan is in action, be sure to make your payments in on time. You know when they are due so there is no need to delay sending a payment! Late payments can be very costly and counterproductive resulting in higher interest rate and fees.

 Stop the Plastic Cycle

You have gone through the hard work of attacking your debts one at a time until they disappear. So make sure you are not using the cards again! It is extremely difficult to try to pay something off when you are still using it and the satisfaction you received from paying a card off will be wiped away when you get another bill in the mail for that new “must have” that you bought! If you are attached to your plastic, use debit instead.

The freedom from debt you will experience is a far greater feeling than any item plastic can buy you!