Guest Author - Cate Brizzell

After completing Step 1, you’ve done a terrific job of restructuring your credit card debt.

You now have all your credit card debt at the lowest rate possible. You may even have fewer cards, simplifying your bill paying and likely helping you avoid late payments and late fees.

Now you have to ensure you won’t be adding to your credit card debt each month.

The reason this step is so crucial is this: mathematically, it is impossible to get out of debt if you’re adding to your debt each month.

Think about it. You pay down $200 in credit card debt, including minimum payments and a few extra dollars. But, you add $300 in credit card debt because it was your friend’s birthday and you really needed a new suit. Now you’re in the hole another $100—even though you were paying your minimums and then some.

Let’s look at some specific things you can do to make sure you spend less than you earn from this point on.

Choose one card to carry – and freeze the others. Yup, I said “freeze”. Choose one card that gives you the most bang for your spending buck when it comes to points or cash rebates. Carefully examine your lifestyle and consider such things as annual fees before you make your decision. Then, put all your other cards in a cup of water and stick it in the back of your freezer. Or just cut them up altogether.

Decide not to use credit cards at all. You can pay with cash, write checks or use a debit card. But beware—cash, checks and debit card numbers can be stolen. Make sure you have adequate protection in case your debit card is used fraudulently. One of the benefits of using cash or debit cards is that you avoid the typical 30%+ extra shoppers tend to spend when using credit cards.

Create a budget for discretionary items. Automate the payment of all regular weekly or monthly fixed payments. Most banks and credit unions now offer online bill payment for free—or a small fee. For discretionary expenses, decide how much you can spend while keeping within the total amount earned each month. It is absolutely crucial that you spend less than you earn. It’s also essential that you know how much you can afford to spend when you shop for discretionary items—or else you’ll go over your limit.

Use a separate savings or checking account for credit card purchases. This will make it even easier to track what you’re spending, and ensure you pay your credit card bill in full each month. Carry a special check register just for this account, and each time you make a charge, deduct the amount from your balance. When it’s time to pay the credit card bill, the money will be sitting right there in your “special” account.

Use all or some of these tips, and you’ll find that you are well on your way to conquering your credit card debt - once and for all!

Next step: Creating up a plan to pay down your credit cards as fast as possible.

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