How I did it: I changed my mindset about spending money.  It's easy to start to think of credit card minimum payments as a monthly bill without much meaning.  I got into debt because every little bit added up.  Now every little bit I can use to pay off my credit cards also adds up.  BofA gave me incentive by deciding to start charging me an annual fee since they can't legally steal from me anymore, thanks to a change in credit card laws.  So I paid the fee, and paid off the card within two months from that point.  All it takes is a little incentive, although it happened so quickly thanks to some good luck and a well timed gift.  Now I've paid off more than a third of my credit card debt, I've changed my habits around spending money, and I'm more motivated to pay off the rest of my debt.  I have a taste now of how good it will feel to be debt free.  I can't wait!

Lessons & tips: Before you buy anything, think about whether or not it's really worth it. Start getting rid of possessions that don't really mean anything to you.  When you look at every thing that you own and decide whether or not it really has value to you, you become much more critical of things before you buy them.  For example, I love books, and I used to buy books pretty indiscriminately.  I figured if it would be worth reading at some point, it would be worth owning.  Then I started to get rid of books that I had already read that I realized I didn't really want to own.  Either they were a cheap copy or I didn't really like the book enough to reread it.  Once I started doing that, I started to think the same way before buying a book.  I would go through a checklist: Do I want to read this RIGHT NOW?  Do I want this to be part of my permanent collection, or can I get it from the library?  What difference will it make to me if I wait to buy it?  By doing this, I have talked myself out of getting most things, and I haven't regretted it a bit.

Also, figure out what your debt is really costing you.  Today, I figured out what percent of my minimum monthly payments is going towards interest, which means it's essentially thrown away.  If I remember correctly, the worst was close to 70%.  If the minimum was $100, that would mean that I was wasting $70 each month!  That made me think pretty differently about the urgency of paying this debt off.

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Jun 17, 2011, 04:49PM PDT | 0 comments | 13 cheers