One of the many challenges facing American citizens today is the issue of credit card debt. With the economy sputtering along and credit lines choked up, more and more people are looking at the debt they have and attempting to figure out how they can remove it from their lives.
Credit card debt is not something that typically hits people all at once. Unless there was a sudden emergency of some sort that requires charging, most people don’t realize how much they’re putting on their cards until it is too late. Random purchases of small value can quickly add up, becoming a monstrous financial burden. A quick purchase of a candy bar at a grocery register, a new pair of shoes, a trip to a shopping center with some friends; all of these things and more can quickly pile up without you suspecting it in the least.
Each purchase seems harmless enough. A couple of bucks here and there and the occasional twenty-something dollar purchase can’t hurt anything, right? It can only do you no good if you don’t prepare yourself in advance for it financially. You should keep in mind at all times that credit is debt, and with debt comes the responsibility to pay it back.
Furthermore, it’s ideal to realize that credit is like a loan against the money you haven’t made yet. If you plan on spending by thinking that far ahead in the future, then you should be able to handle your finances quite well. However, it takes time, effort, and experience to understand how your financial situation plays out from month to month, so the best thing to do starting off is to stop using credit cards until you’ve cleared your debt first.
Getting ahead of debt means cutting out credit altogether until you can return to it at a point that it can actually benefit you. Credit only creates debt, and if you have credit card debt already, you should not really add to the source of the problem. However, if you must use a credit card, then realize what it does to your income by making every purchase a careful and deliberate one based on your best interest.
What that means is to stop spending your hard-earned money on goods that you don’t really need. This takes a little effort, but if you have serious credit card debt, then you need to stop and take the time to realize what you purchase. Make each transaction a conscious one. Write down what you’re buying and the cost of it, and keep it with you in a notepad. At the end of each month, see what you purchased. You could very well surprise yourself with the amount of careless spending that went on.
From there, limit yourself! Know your boundaries, and stay away from impulsive purchases. Ideally, you would want to stay away from all forms of credit while you are in debt. It only makes debt worse. You could potentially use a credit card to build a nice credit score, but this is something that happens only for those who have cleared their debt first.
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Getting out of credit card debt is hard – but good news, it can be done! Start by making it a regular practice to call your credit cards to ask for a lower rate. I have one client who owes over $20,000 on a Visa that was at 18%. He spoke with a ‘rate specialist’, touting his rising credit score and declining balance and got his rate cut in half, from 18% to 9%! His monthly interest charge was instantly reduced by $150, which will help him pay off his debt even sooner.