Credit card debt can suffocate any military family. I know, my wife and I spent several carefree years until we started trying to save for our family. Two years ago we had 12 credit cards with over $60,000 in debt. We were paying only minimum payments and weren’t even covering the interest every month. We were actually losing ground on the credit cards even if we didn’t use them! We made a few sacrifices (like moving in with another couple for a year) but I’m proud to say as of Fall 2011, we owe zero dollars to credit card companies (and only have two credit cards). Here’s what we did:

(1)    Made a family budget – This consisted of all family income and expenses for the month. We included credit cards by minimum monthly payment due and noted the balance of each card.

(2)    Prioritized Credit Cards to pay off – We did this by dividing the balance we owed by the minimum payment due and got what we called the factor. The highest factored card was the one we decided to target first.

(3)    Determined how much extra we could pay – After doing these first two steps we had to honestly assess how much we could afford to pay extra towards our credit cards. We were aggressive, you will need to be too as it gets easier every month. Just don’t neglect other obligations. My wife and I picked $1000. Again it wasn’t easy, it was extreme but we were in a bad situation. Most couples can do $250 easily. 

(4)    Started Paying – After coming up with the three factors we began applying the minimum payment plus the extra toward our targeted card off first, only paying the minimum amount due on the other cards. As we paid off one card we would then shift the extra money and the amount of the minimum payment for the paid off card to our next target. It took us a little less than two years, but again we were in bad shape.

Apply these four steps and keep at it and you’ll see your credit card debt disappear too! Good luck, oh and yeah, the last step – cut up the credit cards!