Here is a link to another excellent article on Bankrate.com about managing credit card debt. 
The article addresses a question from someone called “Elaine”. The question is reproduced verbatim below. Read carefully, it is not about “I cannot pay my credit card debt”, it is more about “I am confused”.
“I am in a lot of debt. I make $40,000 a year and have $16,000 in unsecured debt. I am slowly trying to pay off credit cards and then close them. I tend to find myself making large payments on the credit cards, but then needing to use them because I don’t have enough cash on hand. I know I need to pay them off, but using them again because I need them is defeating my purpose. What should I do?”
I want to give a numerical perspective to Elaine in addition what Bankrate’s Steve Bucci has to say on the question:
-If you are in such a situation where you owe an amount almost half of your annual income, the first thing you should realize is that depending on how aggressively you pay off your debt, it will take you between 3 to 45 years to wipe it off ! So be prepared for tough times and don’t despair early and read the information below carefully.
-A debt of $16,000 for an annual income of $40,000 is a very manageable scenario (though the debt is high) and I would give you a lot of hope for a financial recovery.
-Assuming a 15% APR debt, if you keep making minimum payments for each billing cycle, it will take you 45 years (!!) to be debt free. In that time, you will pay something to the tune of $26,000 just in interest. BUT, this is not realistic, so don’t worry too much if you hear such numbers.
-Why are these numbers (45 years and $26,000) not realistic? I look at it this way; your first monthly payment will be around $320 (2% of your balance). Now, if you can make the first monthly payment, which by the way is not too much considering a $40,000 annual income, you can certainly keep paying $320 for the rest of the billing cycles. This way, the amount of time it will require for you to become debt free will be around 12.5 years and you will pay about $9200 in interest alone.
-If you get a little more aggressive and keep at least $500 each month for your debt payments, you can get rid of that debt in 3.5 years after paying about $4500 in interest….now that is more like it.
-So my advice is simple: stop using your cards right now and do whatever you can to keep $500 each month for your debt payments. “whatever you can” includes renting a cheaper apartment, carrying your self-made lunch, cutting vacations and any other stuff you think you can do. You will realize very quickly that it is not difficult to keep aside about $500 a month just by making smarter choices in your everyday expenses.
-With $40,000 annual income, on a conservative side, I would estimate that your net income would be something like $2500 per month. After taking out $500 for your card payments you still have $2000 each month to spend on yourself ! That is a lot money if you use it wisely 
-Read this article “Pack away your debts with the payment push” and decide how you want to distribute the $500 payments each month.
-And yeah…don’t cancel those credit cards after paying them off…doing that is going to hurt your credit score.
Resources: The following calculators at Bankrate.com will be helpful in planning your campaign against debt:
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Thanks for the link to this article.
Great math as always golbguru. But your article made me feel guilty about having $500 in credit card debt (which is about 2 and a quarter % of my total credit utilization), on a 0% apr for another 11 months credit card, as the money is sitting in Prosper earning over 20% apr.
lol
-Wilks
tired of being broke: you are welcome.
wilks: that is cool. I think I will use your example in part 3 when I write about how to use balance transfers when you don’t have any debts to pay off. When they don’t have debt, people can invest in higher interest earning accounts and offset fees BT fees if any…that’s exactly what you are doing right now.
Your numerical analysis makes the next steps very clear - i.e. pay off the debt quickly by increasing over payment amount over the minimum.
However, it seems there may be a more fundamental challenge of committing to a positive course of action. Your questioner wrote “I know I need to pay them off, but using them again because I need them is defeating my purpose.” It sounds like the questioner knows what to do and needs to make changes in habits and lifestyle to enable her to commit to do it.
Habit and lifestyle changes tend to be very challenging, as most of us have found:-) I hope Elaine is able to make the changes to solve her debt problem.
super saver: yeah that is right. I just wanted to show her that the numbers are working in her favor. Now, how quickly she makes the numbers work in her favor depends on how quickly she changes her lifestyle. I am pretty sure she will force herself with a different lifestyle when she realizes that she can be in debt for 45 years
I appreciate your thoughtful insight.
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