PHILADELPHIA PA – The top New Year’s resolution in 2011 regarding consumer finances was cutting back on debt, according to the National Foundation for Credit Counseling. If you are one of those people who made that pledge, and your resolve is starting to fail, the Philadelphia-based Pennsylvania Institute of Certified Public Accountants offers some tips to help you along.

Get the big picture

Begin by adding up all your outstanding consumer debt.

You may be in for a pleasant surprise if you come up with what seems like a reasonable number, or you may be in for a rude awakening if the total is larger than you expected. In either case, before you can create a plan to eliminate debt you must know how much you’ve got. What you find may change how much money you want to pay off each month, and how long you can expect your efforts to take.

Time to cut the cards?

Once you know where you stand, take a long, hard look at your credit cards. If you have little or no balance on your cards, good for you! If you have multiple cards where you only pay the minimum balance, you need to evaluate and limit your use of credit cards.

It is important to take steps to prevent adding to that amount: Stop using credit cards.

Lowering existing balances won’t happen if you continually add to them each month. If doing away with plastic is not possible, budget a specific amount that you can spend on credit monthly and stick to it. Keep track of everything you spend so you are sure to stay within that budget.

Attack the highest rates first

As a general rule, begin by paying off the debts with the highest interest rates because those balances cost you the most each month. If you’re not sure how much interest you are being charged on each credit balance, check your monthly statement or contact the credit card issuer for more information.

If you have a strong payment record, this may also be a good time to try to negotiate a lower rate with all of your credit card companies.

Pay above the minimum

Always attempt to pay more than the minimum due on any account.

The longer it takes you to get rid of debt, the more time you will spend paying interest on it. For example, if you have a $3,000 balance at an 18 percent interest rate and pay only a minimum $60 each month, it will take you 26 years to erase that debt. Raising your payment to just $100 every month allows you to wipe out your debt in about three and a half years, and slashes your total interest to $1,016.

Questions about budgeting, interest rates, debt management, or any other issues related to your financial life an be answered by a certified public accountant. Find a CPA near you, here.

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