Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

I was recently reviewing the Survey of Consumer Finances, published earlier this year using data from 2007. I thought it was interesting that only 46.2 percent of American households reported having credit-card debt, since the common perception is that almost everyone is living well beyond their means. But what the survey results really reveal is that more than half of the country either doesn’t carry a credit card or pays off their balances every month.

Want to join that club? Here’s what you have to do:

1. “Snowball” your debt. Transfer balances from high-interest cards to a low-interest card and then focus your efforts on paying it off. This will save you the headache of tracking multiple balances at once.
2. Double your minimum payment. If your card has an 18 percent interest rate and you pay the minimum $100 per month, it will take more than 10 years to pay off a balance of $3,000, racking up more than $2,000 in interest in the meantime. Double your payment and you’ll be debt-free in half the time while paying only $754 in interest, according to this calculator.
3. Repay debt with money from savings. Don’t touch your retirement accounts — the stiff penalties make it not worth it — but it’s a good idea to cash out your short-term savings to reduce your debt burden. You may want to keep some cash liquid for emergencies, but it’s highly unlikely you’re earning more in interest than you’re paying to the credit-card bank every month. Using savings to pay down debt is like getting an instant return on your money of 12 or 18 percent (or whatever your APR is).
4. Don’t take out a secured loan. The difference between a secured loan and an unsecured loan is whether you have to put up collateral to sign for it. Credit cards are unsecured debt, so taking out a secured loan — like against your home equity or car — is just about the riskiest thing you can do. If you fail to pay your credit cards, your credit score will tank, but if you fail to pay a secured debt, you’ll lose your house or mode of transportation. Don’t chance it.
5. Stop using your credit cards. It may seem obvious but many people fall into the trap of continuing to use their plastic while trying to pay down their balances. Think of it as financially treading water: It’s impossible to get ahead this way.

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