Carrie Schwab Pomerantz
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Dear Carrie: I'm 28 and have almost $4,000 in credit card debt -- less than a year after I worked extra hours (and didn't go out) to pay down even higher balances on those same cards. As soon as the debt was paid, I lost sight of the budgeting mindset that I'd been so proud of. And now I find myself right back where I started.

I feel like I'm fighting a losing battle. I know I need to adjust my financial attitude, but I don't know how. Can you give me some advice? -- Angela

Dear Angela: Congratulations, because you've already taken the first step in getting out of debt by acknowledging the problem. And this is great timing as you start to think about the new year.

So now it's time to dig a little deeper to understand why you lost sight of your budgeting mindset. I have a feeling that -- as in so many cases when we deprive ourselves -- once you paid off your debt, you felt you could reward yourself for having been so disciplined by spending -- and enjoying -- just a little bit more. (Sounds kind of like dieting, doesn't it!) Unfortunately, those "little bits" can add up to a large balance, especially when it comes to credit cards.

Also, realize that good financial habits aren't just things you should do right now. They have to be habits you can live with for the long term. Of course, you need to take practical steps to pay down your debt once again. But the bigger issue is how to reform your spending habits, so you can stay out of debt and be happy with your day-to-day life.

START WITH A REALISTIC REPAYMENT PLAN

How you pay off your cards can be as important as how much you pay. You need a debt reduction plan you can live with, which doesn't require you to give up everything. Here's what I suggest:

-- Prioritize your credit cards: Start with the highest interest rate card. Pay the minimum on the lower interest cards. Then pay extra on the highest one. When that card is at a zero balance, apply the extra money to the next card on your list.

-- Take a good look at your current income and expenses: After you've covered the essentials like rent, food, utilities and transportation, how much is left? Can you carve out money to put toward your debt and still allow yourself some fun? Depriving yourself completely is likely to backfire as it did in the past. So, strive for some balance as you tackle your debt payments within the context of your everyday needs and wants.

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Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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