Dealing with credit card debt in the new year

Those looking to get a handle on their finances this new year may have to make some big sacrifices, but financial experts say it's all worth it in the end.

Texas A&M University Director of Financial Planning Nathan Harness says he compares credit cards to a fire. A fire, when used as a tool can keep your house warm. However, it can also burn your house down when it gets out of control. Credit cards can help you live a better life, but when usage gets ridiculous it can wreck your credit score which can negatively affect your opportunity to get a new job, a car or a home.

Harness said the first step to dealing with debt can be an extreme one if need be. Some people cut up their cards, others will freeze them in a block of ice to avoid using it. But the real first step is taking inventory of what you have.

"Ask yourself how many cards do I have, what are my balances and most importantly what is my APR," said Harness. "That allows you to begin the process of what do I do from here."

Once you've taken inventory, Harness says there are two effective ways to pay it off: the avalanche or the snowball effect.

"If you choose to go with the avalanche effect, you would start paying down your credit card that has the highest rate first," said Harness. "The snowball effect is when you choose to pay off the card with the lowest balance first. Then you take the additional dollars, begin stacking them up and snowball to pay off more and more debt as the year goes on."

Harness added that the main thing to do is get to the root of the cause of why you're spending all of this money and reevaluate what is necessary in your life. If you get to the root of the problem, you likely won't fall victim again.