Getting Out Of Credit Card Debt

Over the years I’ve spent a lot of time in and around credit card debt. My first professional job was in a customer service call center answering inquiries from credit card customers. From there I bounced around to different areas within the company including fraud, new credit, and then on to software development. Each of these experiences provided ammunition for learning how to get out of credit card debt – something I would use years later to get out of debt myself.

If you find yourself deep in credit card debt, consider the following tips for getting out of debt, and staying out.

  • Transfer balances to a low interest credit card. The lower your average interest rate on remaining credit card debt, the more of a dent each payment makes in that remaining balance.
  • Stop charging. This one seems so obvious I almost didn’t include it. Unfortunately, it is the one people usually fail to do with any conviction. The first step out of any hole is to stop digging. Debt management is no exception. Only then can you begin to devise a plan to crawl out. This step may require you chopping up your credit cards with a pair of scissors (keep one for emergencies), or at a minimum taking them out of your wallet and leaving them in a sock drawer at home. Whatever you have to do, stop making new charges.
  • Pay debts off smallest to largest. Make minimum payments on all but the smallest one, and throw everything you can at the smallest one. The psychological advantage of scoring one or two quick wins bringing balances down to zero is worth the difference in interest charges. This is the snowball method of debt repayment made popular by Dave Ramsey in The Total Money Makeover, but many argue against the mathematics behind it. Like Ramsey says, “If you were good at math you wouldn’t have credit card debt!”
  • Divide credit card minimum payments in half and pay that amount twice a month. Interest is calculated based on the average daily balance of your account for the entire month. By making a payment every couple weeks you are reducing that average balance and therefore reducing the finance charges assessed, as opposed to waiting until the end of the month to make a single payment. As an added benefit, splitting your payment into two separate payments helps smooth out the monthly budget as you will not have to come up with an entire payment once during the month, rather half that amount twice during the month (aim for around the time you receive your paycheck).
  • Make micro payments (commonly referred to as snowflakes) any time you receive extra money. Send proceeds from eBay sales, garage sales, and any earnings from overtime or part time work directly to your credit card as soon as they are received. It may not seem like much, but it adds up. Besides, if you deposit the money in your primary checking account you are more likely to spend it than to use it later in the month towards repaying outstanding debt.
  • Find part-time work. Sometimes this is the only option to generate cash flow over and above your normal monthly earnings. I offer this as a last resort, especially for families, because it often requires a parent being away from their family for long periods of time each day. Working a full-time job and then leaving for your part-time job makes for a long day. However, it also gives you more snow for that snowball, helping you become debt free even faster! Many times you can earn more than minimum wage retail jobs by doing something on your own. In the past I have mowed lawns, submitted articles to paying article directories, and volunteered for overtime to come up with extra debt snowball payments.
  • Close out your newest accounts. As balances are paid off, close out all but your oldest one or two credit cards (I hung on to only my oldest card). One of the components of FICO score calculations is length of credit history, which is negatively affected each time you open a new account. By closing these newer cards you are effectively making the average age of your credit history older. If you aren’t sure about how old your accounts are, I suggest ordering a copy of your credit report at If you are not confident in your ability to manage credit cards going forward, consider cutting up all of your cards and living on a cash basis, but only after you have a fully-funded emergency fund in place of at least five or six months of expenses.

By following the above tips you should be able to make progress towards debt freedom, however there is one key ingredient missing from the list. Anger. You have to get mad about being in debt to get out of it. You have to make it a priority. You have to be willing to sacrifice all other financial goals for a period of time to put every extra penny you can scrape together towards getting out of debt.

As long as you are complacent about credit debt, it will continue to hang around forever. If you find yourself deep in credit card debt I strongly urge you to find the proper motivation and start a debt snowball plan today. Tomorrow is just an excuse away.



  1. We just paid off all of my credit cards, and boy, is it ever a good feeling! I wish I’d had this list two years ago!

  2. Great Tips!
    I second using the emotion of anger to help you get out of debt. That and being “fed up” are what’s helped me pay off $12,000 in credit card debt since January!

    • I agree with Ron these are Great Tips!
      Using anger as an emotion will certainly help you fight the battle against abusive creditors and Getting out of credit card debt is no small feat. I had $68,000 in unsecured credit card debt and had to go to State court 3 times and was sued 5 times. I’m still trying to recover and it will take time. Keep up the good work with giving helpful advice on debt issues.

  3. I know that you’ve talked about this many times before, but I think it is worth mentioning again here. In order to get out and stay out of credit card or any other kind of debt, you have to get yourself on a written budget. If you don’t, then it is very unlikely that you will be able to effectively control your spending to stop charging.

  4. Great tips! I think the last point of getting angry was the most important for me! Getting out of debit is like anything else – you have to want it bad enough that it hurts!

    Side Note – on the side jobs, do you have a list of preferred companies for paying articles? I’ve seen people write about this before but never really considered it until I read it here. TIA!

    • @Andrea: I wrote for Associated Content for nearly a year before starting Frugal Dad and had a good experience with them. In addition to upfront payments you can also earn a page view bonus, so it pays to promote your work. The more you write and promote, the larger this page view bonus grows. For more ideas I’d recommend checking out the site and the ProBlogger job board at Both sites have a mix of freelance work that pay per article, per word, and even a few FT jobs.

  5. Great list and great article! These were all so true for me, especially the anger. Jeff’s point above about a WRITTEN budget (even if written on the computer) is SO true. I think seeing it and watching it go down is so awesome. I just switched to a mortgage company that is the same as my savings and checking and now my mortgage shows up on my online screen when I view checking and savings and that is such an inspiration to send them extra cash every chance I get (I no longer have CC debt or any other debt) and it is so pleasurable to watch that balance go down. It is better than a latte or new blouse any day!
    I did the debt snowball repayment thing before the “snowball” concept was out there or maybe the author that I read stole it from Ramsey but it was exactly the same concept and I will tell you that was the only way to pay off debt for a person like me, seeing each bill disappear kept me motivated and the whole interest thing kept hanging me up before I started snowballing and snowflaking….

    • @Char: You (and Jeff) are so right about the real first step being to create a budget. I’ve heard it said if you fail to plan then you plan to fail. Well, that’s certainly true of managing money. Without creating a budget (your plan) you will most certainly fail.

      Congratulations on being debt free but the house! With your enthusiasm you’ll have that mortgage knocked out in no time.

    • Ramsey steals a lot of his content off of other folks. The folks who pay Ramsey for his advice have to understand a few basics most of his followers average income is around 40K to 55k per household you add a few children and for all the advice Ramsey spouts about cut back on expenses they will never be able to stay out of debt the numbers simply do not add up. Tithe 10% put at least 10% away for retirement now take that number and go get your housing for a family including utilities and home maintenance items. Add food and other household budget items , health care and transportation. Just the need list puts them over already. Not one vacation, not one dollar to David Ramsey. Just do the math folks it cost more than a dollar per day to feed a child you should provide them with clothing and a roof over their heads as well. Do the math! Tell me what I am missing.You simply must add income !

      • you are missing the fact that godliness with contentment is great gain. we have to learn to be content with what we have. Ramsey’s followers come from all walks of life. Dave was a millionaire early in his life and lost everything he had but came back using these very methods.

        These steps work. Tithing works. savings works. these people on this site need your encouragement.

  6. Great list – definitely agree with the “get angry” part. I refer to that point for me as “hitting my financial bottom”: I hit the point where I just could not keep living, one more day, the way I’d been living. And that is what started me on a completely new way of thinking about money. Agree with the budget creation point too: there’s no way I could live within my means without one!

    My suggestion is related: spend a month tracking your spending so you know what you’re spending where. Only then can you figure out where your money is going and where you should make changes.

    I also advocate allotting a small amount of cash each month for fun and recreation: it doesn’t have to be a lot, but enough to do something nice for yourself, and remind yourself that you aren’t on earth for the sole purpose of paying your creditors. I find that when I’m totally rigid with myself I end up rebelling and busting my budget, so allocating a bit to fun/self care actually saves me money in the long run. 🙂

  7. I think #9 should be to build (or add more to) an emergency fund. I know you talk about that all the time in other areas of your blog, but ending on a way to “stay out” seemed good here.

    Thanks for this, and all your other, great posts.

  8. I had seen all points in some form somewhere else but the last: Getting mad about being in debt. This is great advice. I am fortunate to never have been deep in debt, but the dollars and cents paid in interest surely did and do make me angry – I have much better use for them.

  9. When I decided to finally get rid of credit card debt once and for all it wasn’t because I got mad. I realized in a few years I would need money for a newer car, dental visits, and at the time I really wanted a nice garden and I didn’t have money for those things. I realized that if I didn’t have my credit card payments (which at the time, I hadn’t charge on them in over 2 years) I would be able to use that money to save for these things I wanted. It was shocking to find out I had $750 a month that I was sending to credit cards and not saving for the things I needed in the future. I’ve been working on this for one year and I have another year to go! I’m well on my way. 🙂

  10. biggest problem I’ve run into in trying to get debt free is Murphy. Seems just as your getting ahead he comes along and wipes you out. Takes only a few trips to the dentist till the CC is maxed out again.

    That’s the main reason why I’m switching my focus from debt snowball to savings.

    Part of it is also we have only one CC left the rest are loans which run out next year, so even if I do nothing at all I’ll be debt free next year.

  11. Credit card debt is on its all time high with today’s economy. Hopefully people can obtain the help they need to get out of debt. Thanks for the article!

  12. I think having a little backup in case of emergencies is key to getting gout of debt. If you can’t cover a $400 car repair, it is going on the card and you can’t accomplish step one.

    Nice list Frugal Dad.

  13. Your first tip is definitely the most important – no matter how hard it is, you’ve got to stop using the plastic to make any progress getting out of debt. Definitely easier said that done, but if you have any hope of getting out of debt, that’s tip #1.

  14. I like the part-time job idea. Everyone knows that in hard times they should trim the budget. How many try to increase income? I found that just an extra few hundered/month earned can make a big difference if applied to credit card bills regularly.

    Another idea I use is I think of each dollar I spend as costing me about $1.25. Reason is that I have to make about $1.25 before taxes to spend $1. Then I have to pay sales tax. Is the purchase really worth it?

  15. I have about $40-50K worth of credit card debt, I want to pay it back and was doing so until some recent unexpected financial changes in our lives.

    Where do i begin? How do I negotiate with these creditors? I know I owe the money and want to pay it but where do I begin?


  16. my favorite was to divide credit cards in half, excellent tip!! 1/2 payments and a second job will do it! it’s time to divert credit card payments into our savings accounts people!

  17. Something Trent over at mentioned in passing but never elaborated on, is rather than debt snowballing he’d only make the minimum payments while diverting all his extra money into savings. Once he had more than enough money he’d pay the loan off in one fell swoop. We did something similar to that. We save up our money and then every so often pay off a major loan (2 at Christmas)

    This solves the issue of emergency fund vs debt snowball. We did so

  18. Good article and most of it seems like sage advice. I disagree, however, with the last idea- that of taking out a loan to pay off credit card debt. I have looked into this and experts advise against it. Credit card debt is “unsecured” you can ruin your credit, but that’s about it. Taking a loan requires collateral- like your home for example. When you do this, you’ve just taken unsecured debt and secured it. So now if you screw up you not only ruin your credit but you risk losing your home as well….never secure unsecured debt!

  19. Great advice! I’m working my way out of debt now and my goal is to have $10,000 in savings by next year.

  20. Excellent article…great tips…mindset is so important!

    I do want to remind everyone that you also need to think back and remember what got you in debt in the first place…spending more than you earn. It may seem “obvious” and redundant, but when setting up the budget, you must be REALLY ready to make this a lifestyle of less spending and not just a period where you pay off the cards, and then start back at your old ways again, and wind up in the same shape a ways down the road. You just cant go on a fiscal diet for a time and expect it to last. It must be a lifestyle change, a way of life.

    A reasonable budget is definitely the key. Reasonable in that both you and your spouse agree to it and that it is something you all can live with. Use an allowance system for all members of the family. After all necessary expenses(rent, utilities etc) have been taken care of, an allowance can be given to each family member who gets a pre-set amount of $$ each “payday” to spend as they please. This money comes from the $$ leftover in the budget. For the budget master, the budget never goes over from month to month. For family members, everyone has a “payday” with $$ to spend as they like.

    We have used an allowance system for over 16 years in our house. It kept us disciplined, yet gave us freedom to spend our $$ the way we wanted without gripes from the spouse on how we spent our allowance. Check out for an eBook that explains it all.

  21. I got myself some money back from cash back sites online and saved myself a fortune on insurance bills.

  22. As the Rage Against the Machine lyric goes, “Anger is a gift,” and like you say, it’s a great motivator when it comes to paying off credit card debt. The snowflakes point was also excellent–great post.

  23. I’ve used budgeting systems of various sophistication, but always seem to fall off the wagon for a few months by getting out of the routine of entering my expenses into them and then end up spending a few thousands dollars eating out or whatever.

    So I decided to just try the Cash Envelope system, which is a lot simpler.

    One thing I’ve noticed about using the Cash Envelope system of budgeting over the last couple of months is that (a) I’m always within my budget, unless something catastrophic happens and b) in general I’m spending less and thinking about money less-all I need to really do is look at my upcoming bills once or twice a month, and once a month I stock my cash envelopes–that’s it. and (c) the routine of pulling out the envelopes when I make a purchase has kind of de-trained me from thinking of using the plastic cards or associating them automatically with buying things. Instead I am associating an envelope of cash with buying things, which puts an automatic moderating behavior and brake on me. I do use my credit card (since I don’t like using my debit card) for gas and for online purchases, but those expenses are only like once or twice a month, whereas the cash envelopes get used multiple times per month. Using the credit card feels unusual now, which to me is a good thing.


  24. Thanks for providing us with a great list of tips. When in debt it can make you feel so frazzled. It’s nice to have a guide to follow.

  25. As a single mother, I am almost consumer debt free.

    One of the things that I do regularly is set up bi-monthly automatic payments to most of my bills, but all of my credit-reporting creditors, if possible.

    This way, I pay the bill down fast AND I ensure a good credit rating, as I’m never late paying my bill.

    To get in the practice, set up your bills automatically to pay the mininum for each payment, if you can. If you can’t, devide the minium in two payments. Make sure you set one of the payments to pay 2-3 days (at least) before the payment is do.

  26. The part time job is a good one. Most can afford to give up night time luxuries in return for getting out of debt.

    The only good thing I see about being in a whole heap of debt is that once you are out, you really don’t get to that point again. Most make the necessary changes in their lives.

  27. I would like to add something about credit card debt. people just do not understand that this type of debt is amortized daily. And the balance changes as you add late fees and not enough minimum payment to debt service your expenses. Get rid of credit card debt as soon as you can. Pay extra-pay sooner-pay it off.

  28. Paying off the cards is wise… if you dont have credit cards, don’t get them. you are better off without them.

  29. I’m with you Billy. I had not heard of the snowflake method of making payments with extra money. Makes sense to apply it to high interest CC debt especially since you had not planned on having the money to begin with you will not miss it. We recently sold a new vehicle paid off the remaining car loan on it and purchased an older cheaper mini van with the remaining proceeds and had cash to spare. We got the idea from Dave Ramsey when he talked about breaking the stuck logs by doing something drastic to get things moving much faster. With no car payments we have not missed the original car.

  30. Personally, I feel we don’t need credit cards period. These banks have fed us this line of bull that having them is good for your credit score, blah blah blah. The wife and I, are going to pay off our credit cards and never have one again. They are nothing but trouble. Eventually, we are going to make our own credit card so to speak by having a certain amount of money saved for purchases we might need or want. Then once we withdraw from this fund, we will pay ourselves back interest free.