- Personal Finance
How to Prevent Credit Card Debt
Dealing with Credit Card Debt
Credit cards can be very useful things, many will agree. There are some pitfalls to avoid however, if you want to maximize the benefits that a credit card affords. No one ever got a credit card with the intention of getting so far into debt that it becomes a discouragement in life, with no light at the end of the tunnel. There are some things we all can do to help prevent getting into debt, or getting deep into debt in the first place.
Its a very difficult place to be, when one is in credit card debt. It is not odd for consumers like you and me to owe more then twenty percent of our incomes to credit cards, says the Federal Reserve Board. At first I wondered if that twenty percent includes what is owed on a possible mortgage or home equity loans, but it does not. This should be very eye opening to those of us that want to maintain (or get) good credit.
Avoid learning lessons the hard way
I am one of those people that when I was younger, learned a lesson about credit cards the hard way. It was way too easy to get a credit card when I was fresh out of high school, and new on my college campus. They were giving out gifts along with making it oh so easy to get credit cards. I got one, and being a college student that needed things, and wanting to have occasional fun, I used it. It is alarming how quickly things can add up, when you aren't really meaning for them too! Needless to say, I eventually got out of that debt, but it was not a fun process. I got buried in interest and discouragement both. Never again will I be so careless. I am glad to learn that lesson, but I wish I didn't have to learn it the hard way. Now I try to hardly use a credit card and I have great credit, but it took a lot of hard work.
Speaking of interest on your credit card balances, it is very high compared to other loans you could obtain. When you owe, you owe a fair amount more every month, depending on what your balance is. I remind myself of this when I am tempted to rack up more on my credit cards. Not even great sales are worth that, because you are really paying so much more in interest anyway. You end up paying more than the non sale price of things when all is said and done. That is silly, and no money was saved, and money was lost.
Get some good advice. Resist the urge to spend and use your credit cards. There are credit counselors out there that will tell you to get rid of the credit cards. Painful as it may seem at the time, this is great advice. Just get that pair of scissors out, cut the credit card up, and don't look back after throwing it away. You will be so glad you did, and you will actually have much more money than if you kept on a path of debt with the credit card. Look at it as throwing away the card, to have more money long term. You will be forced to limit what you spend, which is a good thing. Have the goal of limiting what you spend in mind at all times. Try to pay for things with cash. This is very liberating and when the money is gone, it is gone, and your mind can move on to other things anyway.
Repay as quickly as you can
By paying off the biggest chunks off your credit card that you can afford, at a time, you will see your debt decrease. Your interest being paid will shrink as well. Think of the alternative as unthinkable, even horrible. Don't postpone the problem, don't put it off no matter how stressful or upsetting it may seem at the time. Try to actually look forward to the bill, so can open it up and send off a check asap. This way you never risk paying any possible late fee either. That is just wasted money and no one can afford that or wants to spend their money in such ways.