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Five tips to eliminate your credit card debt

MR & PRwavebreakmedia/Getty Images/iStockphoto Paying off your credit card debt is possible, if you stick to a plan.

She’s not the type you’d expect to end up loaded down with credit card debt.

But Beverly Harzog — a certified public accountant — racked up balances north of $ 20,000, thanks to a shopping addiction and a passion for designer labels.

A young professional then in her 20s, Harzog maxed out seven credit cards. She hit her “rock bottom moment,” she said, when her favorite one was canceled.

“At that point, I decided it was time to take back my life,” Harzog writes in the introduction to her just-released book, “The Debt Escape Plan: How to Free Yourself from Credit Card Balances, Boost Your Credit Score and Live Debt-Free.”

Harzog went on to devise a plan that got her out of credit card debt in just two years.

Three decades later, she is now a credit card expert and the author of personal finance books.

The key message of her latest: “Look your debt in the eye and own it,” Harzog told the Daily News.

“Only then will you be able to create a debt escape plan.”

In spite of the improving economy, many are still carrying sizable credit card debts.

The average credit card debt balance as of the third quarter of 2014 was $ 5,249, according to credit bureau TransUnion.

Unlike student loans or mortgages, which are often called “good debt” because you are making an investment, using credit cards mean you are borrowing to make purchases that aren’t appreciating in value, Harzog notes.

Because you pay interest on credit card balances, they could cost you huge sums in the long run — especially if you only make minimum payments.

Don’t wait until you hit your rock bottom. Here are five debt-busting tips from Harzog to help you get started on your escape plan.

'The Debt Escape Plan' by Beverly Harzog provides tips to help you eliminate your credit card debt.‘The Debt Escape Plan’ by Beverly Harzog provides tips to help you eliminate your credit card debt.

* Budget. Get a handle on all of your spending and then look for places where you can save. This might mean eating lots of peanut butter and jelly sandwiches, as Harzog did when she was paying off her debt.

The money you find will become your “debt escape money” to be used to attack your debt. You can find a budget worksheet at BeverlyHarzog.com. Set a budget and stick to it.

“People have to decide what they are willing to sacrifice,” Harzog said. “If you love your latte, keep it, but find $ 3 a day elsewhere to cut.”

* Face your debt. Make a list of every one of your credit cards, its APR (annual percentage rate), and the balance you owe on each one.

“This is a good way to jolt you into reality,” Harzog said.

* Pick your payoff strategy. You want to choose a strategy that fits your personality.

MR & PR4774344sean/Getty Images/iStockphoto The average credit card debt balance as of the third quarter of 2014 was $ 5,249, according to credit bureau TransUnion.

There are three options, said Harzog: The popular “avalanche” method where you tackle your highest interest rate debt first; the “snowball” plan, where you erase your smallest debt first (the idea is to give yourself a nice psychological lift); and the “blizzard,” method, a combination of the first two.

* Stay motivated. “Celebrate milestones,” Harzog advised.

“Let’s say you stuck to your budget for the month. Give yourself a little treat, like a pedicure or an inexpensive bottle of wine.”

* Rebuild your credit score. “I don’t care how bad your situation is, there are steps you can take today,” Harzog said.

“Pay all of your bills on time. You can actually start rebuilding your credit score while you are in the process of reducing your debt.”

Lifestyle – NY Daily News

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