Mary Rowland's article on MSN.com called “10 Steps to Debt Freedom” has some solid advice and concrete actions for killing the debt dragons that may be smoking up your personal finances.
The ones that are especially good:
Figure out how much you owe. Where are you now? It's hard to know where you're going if you don't know where you are.
Add up your monthly payments, and figure out how much over the minimum you can pay. If you're “keeping up” with your minimum payments, then you should already know what total in the first part is. But you'll be paying off the cards for a really long time unless you pay more than the minimums.
Pay the minimum on your lowest rate cards until you've paid off the balance on the more expensive cards. This strategy will result in the minimum total interest paid if you have a set amount to throw at your debt repayment.
One I'd add:
Once you've paid off one card, pay the same total amount toward your remaining cards. This accelerates the payment of your debt if you add the minimum that you were paying on the other card to the next one.
Some I might think about a little before acting on:
Consider using your savings to get out of debt. “Sure it sounds harsh. But if you put together a balance sheet, your debt would cancel out your savings anyway. If they're in the bank, you're probably earning just over 3.2% to carry debt at 18% or more,” Ms. Rowland writes. This is true to a point: you don't want a lot of savings if you're paying down debt. At the same time, you don't want to totally wipe out your savings to throw it towards debt repayment, because you do need a little bit of cash for emergencies. Not as much as you should have if you have no debt, but some.
To this end, if you have little savings and debt to repay, you might consider doing some saving at the same time that you pay off your debt. If you have, say, an extra $200 per month that you have found in your budget to improve your finances, then you might consider using $100 to build up a small emergency fund and the other $100 to accelerate your debt repayment.
There are lots of ways to go about reducing credit card debt, and as long as the balances are going down, you're making progress!
I would definitely consider using my savings to pay off debt. I'd much rather get out from under the debt and run a risk of having to dip back in to debt (if I used my emergency funds to pay off any debt I had)
Luckily we don't have any debt, other than mortgage so I haven't had to worry about this.
If we ever do find ourselves in debt, I plan to use short term borrowing from our preestablished HELOC. It's sitting there as a backup to our emergency funds. (It's the one thing that I've actually picked up from Suze Orman)
Hazzard
Cool — at least you have a backup plan so that you're not without access to funds if you need them. As long as you're not taking on more debt than you can handle should you need to tap into the HELOC, this might work.