With tax season coming up, it’s easy to get nervous about finances. Taxes force us to look deeply at our spending decisions over the past year and possibly shell out even more money. One easy way to start is by tackling credit card debt.

We all know that you should pay off your card in full every month. But maybe you went overboard for a month or two and now you’re saddled with credit card debt, complete with those nasty interest payments. Here’s our take on how to get out:

1. Make a plan. Mint.com has a guided experience that will walk you through the steps you need to take to pay off any debt, including credit card and student loan debt. Independently, consumers can take the first step to paying off their credit card debt by making a plan that complements their budget and doesn’t overextend finances. After totaling up your debt, take a look at spending. Subtract expenses from monthly income and see what’s left to start paying down debt. If this amount is too small, look for ways to reduce spending such as canceling or modifying the cable subscription, buying generic versus name brands or carpooling as ways to cut back.

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2. Pay down credit cards. Sort credit cards from highest to lowest interest rate. Pay off the balance with the highest interest rate first to help increase the payments you can make on the remaining cards. Interest is just money flying out of your account, people!

3. Pay more than the minimum. Break the habit of paying only the credit card minimum required each month. When possible, double a minimum payment to reduce interest rate expenses over time. If you’re getting a tax refund this April,  consider using it to make an extra payment on your debt, too.

4. Curb spending.  Stop using credit cards when paying down debt. Leave the credit cards at home and avoid temptations like cash back and purchase rewards.  Paying for everything electronically is a good way to cultivate a list of where your money’s going– you can check your bank statement to see exactly what you spend money on. Paying with PayPal helps with that, too– you can pay friends back over the app and make a note to remind yourself why you owed them money. Once you have a good handle on where your money is going, you’ll be able to isolate areas where you can cut back.

Posted on 1/23/2013

Disclosure: PayPal is a sponsoring partner of the Dot Complicated book tour

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