The holidays are over and you’ve had a great time.  The dreaded credit card statement has arrived and you wonder how you are going to pay it off.  The happy holiday memories suddenly disappear.  Unfortunately there are no magic ways to wipe out debts – it just takes discipline.

Paying off credit card debt quickly requires more than paying off the minimum each month.  Most credit cards ask you to pay around 2% of the balance each month.  With interest rates averaging around 16% pa, sometimes more, most of your payment will pay just the interest with only a small part reducing the debt.  It may take years to pay it off this way!

You need to pay more than the minimum and here are some ideas to make the process less painful.

Hide it before you spend it.  Arrange for an automatic deduction from your pay to a separate account so you never see the money.  Use that account to pay off the debt.  Alternatively, you can organise a automatic deduction from your cash account to your credit card every pay day.  If the money is not there, you can’t spend it.

Save the little bits.  Put all the 50c pieces or “gold coins” ($1 and $2) you get in change into a savings jar.  Preferably one you can’t open like the piggy bank of your childhood.  You’ll be surprised how quickly it adds up and every time you add to your pot you’ll be reminded of your goal.  When it’s full attribute the entire contents to your debt.

Sell something.  Many of us have things we really no longer need – an old record collection, a bicycle we never ride, an unused musical instrument, and so on.

Spend less.  Careful spending doesn’t need to impact on your lifestyle.  Try these ideas:

  • Check the supermarket catalogues and buy the brands on special.
  • Cook at home rather than at restaurants or buying take-away.
  • Lay-by birthday and Christmas gifts during the store sales.
  • Check out upmarket clothes recycling stores, they often have designer clothes at bargain prices.

Use windfalls.  Every now and then a chunk of money comes your way – back-pay, a bonus or a tax refund.  It’s alright to give yourself a treat but put most of it towards your debt.

Ask for help.  If all else fails, talk to your credit card institution about other ways to pay off the debt.  They want to be re-paid and may be prepared to make special arrangements for you.

Think creatively about having fun and enjoying life without spending a fortune – and don’t forget to celebrate when the debt is gone.


Find out how we can help you, contact us today