Let’s say you have a credit card debt problem…

credit card phone wallet spending headphones

Maybe you’re reading this with a sheen of cold sweat on the back of your neck, because you feel like it’s addressed to YOU! The average American who carried credit card debt is carrying around $15,500 of it (note, this is the average for indebted people, not for all households, because there are many households in America that don’t have credit card debt – I know right?!).

That is… a lot. The median household income in America (that means the income that 50% of families earn less than and 50% of families earn more than) is $51,017, which means that an indebted American household carrying credit card debt and earning a median income owes three-and-half months’ salary to its credit card company.

So, maybe you are one of those people who is carrying a hefty balance on your credit cards and feeling stressed about it. You’re not alone, and things are not hopeless. There are things you can do to get out of this mess.

1. Face facts

If you’re carrying a lot of debt, the first thing you need to do is face up to it. Sit down with all your credit card bills, store card bills, promissory notes from your mom – whatever we’re talking about debt-wise (for the moment, I’m going to pretend you have no student debt or mortgage, that’s a topic for another day, and those debts typically have lower interest rates than credit cards and suchlike, so it’s OK to deal with the other stuff first).

Write down exactly what you owe on every card, and the percentage interest rate you are paying. Don’t freak out about it, just write it down and face it. There it is. That’s what you owe. As a reward, enjoy this picture of a sleeping otter.

Now, write down what you’re paying towards each debt each month. If you’re just paying the minimum, note the amount and the fact that it’s the minimum. With this knowledge, you’re ready to start your debt diet.

2. Find spare cash

Previously, we’ve talked about using a budget and tracking your spending (if you haven’t built these two habits, check out those links and work on it, because they are the foundation of healthy personal finances). When you prepare your budget for next month, make it a priority to find as much extra cash as you can. Cut down on your spending any way you can, and try to free up around 10% of your income if possible.

If you are saving regularly (unlikely if you’re a serious credit card addict, but totally possible), it may be a good idea to put your saving on hold and redirect that money to paying down your debt. It’s VERY unlikely that you earning as much interest as you are paying on your credit card debt (actually, it’s basically impossible unless your savings are being used to fund a prosperous crystal meth business – those margins are amazing I hear). Thus, in the long run, you’re way better off paying down bad, high-interest debts before you start saving (I talked about the difference between good and bad debt here).

Do whatever you must to free up at least a few hundred dollars a month.

3. Do the debt snowball thing

(True confession: This is 100% stolen from Dave Ramsey’s The Total Money Makeover, which is a great book that you should read immediately. However, since you’re here already, you may as well finish this article up first.)

Typical advice in the world of advice-giving about money is that you should order your debts from highest interest rate to lowest interest rate, and then start directing all your surplus cash to the high-interest debt, paying the minimum on everything else. Once that’s done, move to the next-highest etc. This is actually really sensible advice. The most cost-effective way to pay off debt is to take out the high interest stuff first.

But, humans are humans. With feelings. Lots of feelings. In some cases, all of the feelings. And paying off debt is a tough process involving a lot of delayed gratification (gross) and very little fun (aww). So what Ramsey suggests is that you order your debts from highest to lowest by what you owe and then pay of the littlest debt first. Say you owe $10,000 on one credit card at 16% APR, $18,000 on another at 21% APR, and $550 to Happy Cat Emporium at 5% APR.

Sensibleness would tell you to pay off the $18,000 as hard as you can. But that will take a long, long time and be sad and boring. With the snowball method, you pay off the Happy Cat Emporium first. In two months or so, you’ll have the positive boost of being able to cross one debt off your list. You’ll be inspired to move on to the next, and before you know it, you’ll be debt-free!

This is actually a very effective way to psych yourself into paying off debts. It’s not ideal in terms of actual money managing, but it does work with human nature. Pick the method that works for you, but begin tackling your debt now. Every day you delay you pay more interest.