Just in Time for Graduation: 6 Steps to Attack Credit Card Debt

This May, 1.5 million seniors will graduate from college with more than just a diploma. According to Sallie Mae, the average college senior graduates with approximately $4,138 in credit card debt alone.

For many, graduation marks the end of formal student life - the end of long spring breaks and of thinking that a 10am class is far too early. Many graduates will be financially independent for the first time, starting new jobs, moving to news places, and learning that many of life's most basic survival skills were not taught in History class - particularly how to properly manage your personal finances.

Recently, many undergraduates and recent grads have asked me the same question: "I have student loans and credit card debt, but I do not a ton of money saved up. I know I should deal with my credit card debt first but how do I even start?" This is great question and young people everywhere need answers.

There are no quick fixes when it comes to getting out of debt but prioritizing bad debt (credit card) from good debt (student loans) and learning how to avoid common financial mistakes are the first steps towards a brighter financial future.

Below is a basic, six step plan to help graduating seniors (or anyone!) tackle their credit card debt one step at a time. Once you pay down your credit card debt, or bad debt, then you can tackle your student loans, or good debt while building up your savings.

First, tackle credit card debt with these 6 steps:

1. Commit To Pay.

Commit to allocate every single dollar that you can spare after paying off your expenses to pay down this debt. This may mean that you are making significant sacrifices in other areas of your life, but I promise that you will feel it is worth it when you are completely debt-free. Use LearnVest's Budgeting Tool to understand how much you can allocate each month towards your debt repayment. We also like this tackling credit card debt calculator.

2.Pay Your Minimums On Time!

NEVER, never, never miss the minimums due on any debt (student loans, mortgages, etc) in order to pay off your credit card faster. (Don't miss paying your bills either!) If you fail to pay your minimums for any debt on time, your credit score will take a major hit and you run the risk of seeing the interest rate on all of your cards go up. An easy way to remind yourself to pay, is to sign up to receive your statements via e-mail. Getting your bills e-mailed to you will help keep you 100% on top of them: you will have them all in one place, instantly accessible to you at any time. At a minimum, we recommend you receive e-mail reminders for your credit card, cell-phone and cable bills! Set up calendar reminders too.

3. Figure Out Your Pay Order.

Line up your cards (along with a recent statement) from highest APR to lowest APR and dedicate as much money as you can spare each month towards paying down your card with the highest interest rate. Paying off the most toxic debt will free you up sooner and help you pay less in the long run. If you need help figuring out how much to pay each month, check out this debt calculator. For information and advice on understanding the difference between good debt and bad debt, see LearnVest article on "Which Debts To Pay Off First."

4. Try To Negotiate.

Call up your credit card company and ask for a better rate. Emphasize your long relationship with the card company (if you have one), and tell the representative that you're considering a switch if she can't lower your rate. If the representative pushes back, see if you can be transferred to an account manager. I've heard stories of 17% APRs dropping to 10% with just one phone call. Keep in mind, however, that credit card companies may be tougher negotiators because of the current economy.

6. Don't Declare Bankruptcy Without Strong Consideration

Even if you feel like your debt is just never going to go away, think long and hard before declaring bankruptcy. Declaring bankruptcy means that getting a loan for anything will be next to impossible for the next 10 years. And, if you're looking to go back to school or start a family, that's a long time to not qualify for student loans or a mortgage. Definitely seek professional advice before you consider bankruptcy!

If you want to learn more about managing debt, LearnVest's step-by-step checklist on tackling debt can help you. Or if you simply want a refresher on credit cards and the importance of a credit score in your post-graduate life, check out the Credit Basics. Most of all - to 2010 Graduates - Congratulations! By receiving a college degree you have accomplished a tremendous amount. And, good news: In the "real world", your credit score will be a far more important number than your GPA will ever be!