By now we’d figured out where all our money was going. Hopefully you’ve had some time to look at where yours in going each month too. Scary isn’t it? It’s so easy to think that $2 here, and $5 there is just a drop in the bucket – but those drops add up and soon the bucket is overflowing!

So now that we’ve cut out expenses, it was time to tackle the credit card debt. Here’s how we did it and hopefully you can find some inspiration from it as well!

First, we contacted every card we had and asked for an interest rate reduction. We didn’t just talk to the customer service people either. If they couldn’t give us what we wanted, we asked to speak to someone above them. We were persistent in our efforts. Out of the seven cards we hold, we managed to get a rate reduction on four of them. On one card we managed to go from 17.5% to 9.5% — a substantial reduction.

Next, we lined all of our cards up and looked at the balances on them and the interest rates. We decided to “pay it down” in the order of highest interest. The only exception was we had one card with only a $500 balance on it. For that one, we decided to pay off immediately. The others we approached this way:

• Pay the minimum amount due on all cards each month.
• For the card with the highest interest (if you have more than one with the highest interest then choose one) we paid the minimum plus all we could comfortably afford above.
• We did this consistently each month.
• Once we paid off the card with the highest interest we took the minimum payment for that card plus the entire extra we were paying and put it towards the next card on the list.

So what happens is that every time we pay off a card, the next card on the list gets paid off faster because we are taking that extra money and putting it towards the card. Once you pay 2 or 3 cards off you will be shocked at how fast the others are paid off!

Of course, what we did to help the process along was that my wife and I both took on a bit of extra work. She taught summer school and I got a job working over at Home Depot for the summer in the evenings. Sure, it took time away from our family, but we took that extra money and used it to pay off the cards even faster. In the end, we were helping our family by getting out of debt!

It’s a dollar here, a dollar there but it really does add up. [editors note: Thanks Tom!]

Related posts:

1. Guest Post from Wide Open Wallet
2. Credit Card Arbitrage: A final word
3. Tom’s third post: Ever-rising interest rates!
4. Tom’s first post – Getting Started
5. Tom’s second post – Into the abyss…