Many Americans are feeling the pinch of the recent increase in the required minimum payment for credit cards. The change went into effect late 2005/early 2006 and as many of you have now received updated statements, I am sure you are seeing the effects.

The goal was to help people pay off debts faster and reduce the interest owed. However, by doubling the amount due each month, many of you have found yourselves in default and you may be starting to see late fees and penalties beginning to mount. If you were a consumer already indebted and struggling to make the 2% minimum payment, you may now find yourself at a financial breaking point. To give you an example, if you were holding $20,000.00 in credit card debt before the minimum increase you would have been paying about $400 a month or $4,800 a year (if you were able to avoid penalties). Now, with the increase in the minimum, if you carry $20,000.00 in credit card debt you will fork out at least $800 a month for a total of $9,600 a year. That additional $400 is the equivalent of making an extra car payment each month. For a struggling family, this is a very tight noose.

As we are all faced with the harsh reality of higher energy prices, rising interest rates, gas prices over $3.00 a gallon, and record levels of overall household debt, it is no wonder many of us are falling further and further behind. Many of you may have fallen victim to illness or unemployment and use these cards for medical bills and everyday expenses. However, the payment must be made, so where will that $400 come from? You need to evaluate some areas in your spending where you could find that $400. Here are some very simple solutions that may help you find the extra $400 in your budget.

1. Cut down on going to Starbucks or purchasing $4.00 designer cups of coffee. Try a local 7/11 where you will only pay $1.20 or make the coffee at home. This gives you the opportunity to save anywhere from $2.80 – $3.50 a day. Over the course of a month that could be a savings of up to $105.00.

2. Instead of going to see a movie every weekend and spending up to $10.00 a ticket, just go once a month. This could be a simple savings of $30.00 a month.

3.Bring your lunch to work. In general, you probably spend $12-$15 on lunch if you are eating out each day. You could easily save about $300.00 a month by brown bagging it.

4. If you have a maid or maid service, which generally costs $50 a month, you can save that money by setting aside time for chores. Cleaning burns calories too, so it can serve two purposes.

5. If you are a smoker – think about quitting. If you are smoking a pack a day you are shelling out about $5 a pack. By merely reducing the amount of cigarettes you smoke to 2-3 packs a week, you can save up to $70 to $90 a month.

6. Purchase lower octane gasoline. Unless you drive a high performance vehicle there is no reason to pay the extra $.10 to $.20 per gallon to fill up with higher-octane fuel. This will save you about $3.00 per fill up if you fill up six times per month that would be a savings of $18.

These very simple tips amount to a savings of almost $600 a month. It is also very important that you have a personal budget, money you use for personal spending. The budget should be reasonable; $50-$75 per week is attainable. If in any week you do not spend your budget the extra money should be put toward paying off your credit cards. Another great tool to help save money is to clip coupons. Many grocers offer double coupons; this is a great way to save at the register. You can even get many items for free this way by being aware when your couponed items are also on sale. Just make sure that you are only clipping coupons for things you need so you do not increase your spending.

If you ever find yourself in a situation where you are falling behind on your monthly payments, consider filing bankruptcy, or even stop paying your bills, seek help.

Damsel of Debt Reduction