There is no question that when it comes to credit card debt -"The smallest good deed is better than the grandest good intention" – Duguet

And this quotation reminded me of a letter I received recently. It read:

"Dear Glenn, I need your help! I have ended up with credit cards debts that I can't seem to pay off. I've been sending the "minimum payment" on the cards most months but they are usually late because of my other bills. I don't use the cards now except for emergency situations but they don't seem to be going down. I feel like I'm throwing my money away. Desperately need help."

Unfortunately, Vanria is not alone in her financial plight. Credit card debt is a common problem not only in The Bahamas but worldwide. The good news is that with an organised financial planning approach and some determination, you can get rid of it.

Here are the four simple financial planning steps I shared with Vanria and I'm sure it will work for you as well:

The first thing you need to do is stop spending

You need to stop piling up debt on your credit card. If you continue to use the plastic, no plan will eliminate your problems, so you must adjust your lifestyle and stop splashing out the card.

Your Second Step - Add up your total credit card debt as you might have more than one card.

You need to include in the final total, the interest rate charged, how much interest is charged each month and what your minimum monthly payment is. Once you have this information, you need to focus on paying off the 'highest interest' card.

Your Third Step - Stop paying just the "minimum" requirement, otherwise you will be in debt for the rest of your life.

Remember, the credit card company wants you to pay only the "minimum payment." But you need to focus your financial planning on being debt free.

Quite simply, you need to pay-off as much as you can each month, so you can make inroads into the principal amount owed.

Your Fourth Step -Stop making late payments.

Every time that happens, you have to pay a 'late fee' of $15.00- $25.00. Amounts like that will quickly add up and you could be paying an extra $180.00-a-year per credit card. The more credit cards you have, the more difficult it is to keep up with 'on-time' payments. Again, that is another reason why you should reduce the number of cards you have.

Finally, Vanria said she felt like she was "throwing money away," and she was right. The money you spend on interest charges and late fees will buy you nothing, so ask yourself a question: "Suppose you had that money available to spend each month, how would that improve your cash flow?" 

The major problem with credit card debt is that you do not see the money that you are spending on interest because most time you are afraid to read your statement but think about this.

If your Visa  credit card debt balance is $4,379.27 and the card's interest  is 18.00%  then you are paying ($4,379.27 x 0.1800)=$788.26 in annual interest payment alone. 

Money that buys you nothing and goes directly from your pay cheques to profits of your lenders.

So why don't you start using these 4 simple financial planning steps to get over your credit card madness!

And If You Need Help "Taking Control of Your Money workbook" is a helpful to help you do just that take control of your money.

"The more you see yourself as what you'd like to become, and act as if what you want is already there, the more you'll activate those dormant forces that will collaborate to transform your dream into your reality" – Dr. Wayne Dyer

Copyright 2001 - 2009 - Glenn S. Ferguson