you pay just the minimum,” says Mary Hunt, author of Debt-Proof Your Marriage: How to Achieve Financial Harmony (Revell; $19.99) and the creator of Cheapskate Monthly, a newsletter and Website (www.cheapskatemonthly.com). “As long as you’re not adding to your current debt load, you’ll be able to pay [it] off.” Hunt’s Website offers the Rapid-Debt Repayment Plan Calculator, which calculates how long it will take you to pay off your debts. Here’s how the plan works. Say you have four debts. Add up the minimum payment due on each account and commit to paying at least the minimum on each debt per month. “Line up your debts according to size, putting the one with the shortest pay-off time at the top and the one with the longest term at the bottom,” says Hunt. As one debt is paid off, take the money you were paying toward the paid-off debt, and apply it to the regular payment of the next debt and then use the same process with the debt after that until the entire debt is paid in full.
OK, you’ve contacted your creditors and have hopefully negotiated a little leeway. Now it’s time to figure out how you’re going to pay down your debt. Write down your monthly income and your monthly expenses and then factor in your debt. You have to figure out how the credit card debt fits into your overall budget. It doesn’t? Well, read on.
If money’s really tight, consider taking a part-time job until the debt is paid down, says Brooke M. Stephens, author of Wealth Happens One Day at a Time: 365 Days to a Brighter Financial Future (HarperBusiness; $14). And “see if you have money in savings and apply some of that money toward your debts,” says Diane Mull, the regional director of community outreach for Consumer Credit Counseling Service of Southern New England. But Mull warns that consumers should never deplete their emergency reserves.
“Give up one habit, such as a manicure or pedicure, and consider canceling your cable TV for a few months and use the extra money to repair holiday debt,” says Hunt. Juliette Fairley, co-host of the Discovery Channel’s money makeover show, Cha-Ching! Money Makers, suggests using a phone card instead of paying for long distance. “I don’t have long distance on my phone,” she says. “I cancelled it after I realized I was paying $150 a month. Now I use a phone card for long distance calls.”
Create a spending plan. Write down your salary, your expenses for the month, and your debts. “Be realistic about budgeting so you don’t get discouraged,” says Lawrence. “Keep track of your expenses for the first three months,” she says. “After three months you’ll be able to see where you need to cut back.”
Don’t panic if you still don’t have the money to pay off your debts. Contact an agency affiliated with the National Foundation for Credit Counseling, says Mull. “They will put together a budget for you and will forecast how long it will