Eliminating Credit Card Debt on a Low Income

Recently upon printing off a credit card statement, I actually gasped when I looked at the interest I paid in one month: $24.66 on a balance of $1,650. My payment of $50 barely put a dent in the balance! It irked me thinking how many hours I had to work just to pay the interest on this one card, so I decided my financial goal for 2013 is to eliminate my credit card debt. I cut up that card and tossed it in the trash where it belongs.

My second credit card has a balance of $750 and a much lower interest rate. (Conventional wisdom tells us to keep at least one major credit card, and I agree with that.)

Additionally, I have a few store credit cards with small balances, but the interest rates are high.

My net income is only about $1,200 a month. I don’t use my credit cards to go on vacation or buy anything luxurious, I use credit to survive; to pay an electric bill or to buy groceries. But how can I avoid this? What can I do differently in 2013 that can change that? And where can I cut back?

I realized eating out was taking a chunk out of my income, mostly fast food but the occasional restaurant as well. I plan to reduce it to only twice a month from the current average of six to seven times a month. At an average of about $8 a pop, reducing the number of times I eat out will save $40 a month.

I will change the bad habit I have of paying on my credit cards and then using them again. Doing that is a surefire way to never get them paid off. Also, paying only the minimum payment never gets you anywhere in reducing the balances. So, I plan to pay at least double the minimum payment.

I cut my cable down to only about 20 channels, saving around $30 a month. My ceiling fans have three light bulbs in each, but I operate them with only one or two and this has lowered my electric bill each month. I’m also clipping coupons for both food and health and beauty items, saving $30 to $40 monthly.

I have two containers for change; one is pennies, the other quarters, dimes and nickels. Anytime I buy something, the change goes into the jars. For example, if a soda comes to $1.03, I pay with $2 and receive the .97 cents back, which goes directly into the savings jars.

Yes, I am literally saving my pennies, but they do add up. Every six months or so, I wrap up about $6 in pennies alone. The jar with the other change equals close to $200 when it’s full and that takes about six months. That wrapped up change will go directly to paying off the credit cards.

I truly look forward to seeing this on my credit card statements: “Interest Charged – $0” “Balance – $0.”