It is no secret that most people have too much
consumer debt. It is all too easy to just sign
your name on the dotted line and run that credit
card up to the max. Unfortunately, many users
of credit cards seem to forget that eventually
the bill comes due, and they may be in for a rude
surprise when it does. Credit card interest rates
are notoriously high, even for consumers with
good credit. Where a secured loan from your bank
or credit union might cost you 8% or 9%, interest
rates on typically unsecured credit card loans
can be 18% or even higher.
At
interest rates like that, it could take you
decades to pay off even a small balance if you
only pay the minimum balance due each month.
Add that to the extremely high late fees and
over limit fees that credit card companies often
charge, and you can see how easy it is for many
people to begin drowning in debt.
The
most basic tool in getting a handle on your
debt and eventually eliminating it altogether
is to make a monthly budget and stick to it
month in and month out. The family budget is
the most basic form of financial planning, and
I am always shocked by the number of people
who do not take the time and the effort required
to create this simple financial document.
Making
a budget will go a long way toward getting a
handle on your spending and lowering your debt.
Write down every penny you spend, from that
$2 cup of coffee each morning to that $20 tank
of gas to your monthly mortgage payment. Seeing
your spending in black and white can be a real
eye opener, and you may instantly see simple
and painless ways to tighten your belt and save
yourself lots of money.
Just
tightening your budget a little bit can provide
you with extra money to pay down your debt.
Paying extra on your credit card bills can go
a long way toward retiring your debt. Of course
after your debt is paid off, you will have to
make a concerted effort to not run up any more
debt. Cut up those credit cards and keep one
with a low credit limit for emergencies only.
Use it only when absolutely necessary and always
pay it off every month.
It
is always difficult to save money, and getting
yourself out of debt can be difficult. It is
not beyond your ability, however. Getting a
handle on debt can be done with just a little
bit of advance planning and financial know how.
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Ellise
Walsh is an author for the Debt Help website
sosdebt.co.uk assisting individuals with debt
elimination and credit information.