In today’s post-recession economy, credit is scarce. Potential homeowners and small business owners are finding it very difficult to secure lines of credit and other forms of bank lending. Many Americans who haven’t suffered through the difficult loss of a job or home have still suffered through wage freezes and other economic challenges, and this has resulted in many people fighting to pay the bills each month.
When it is difficult to make ends meet, one of the most common temptations is to begin financing our monthly expenses with a credit card. If you have built up an uncomfortably high level of credit card debt over the last few years, the good news is that it is never too late to fix the situation.
Although bankruptcy may be the only possible solution in some isolated extreme situations, normally a person can escape the trap of credit card debt with a little planning and self-discipline. In this article, we are going to discuss 3 practical steps to escape the pressure of credit card debt.
Step 1—Stop Using Your Credit Card!
This may be a no-brainer, but the reality, as we all know, is that this can, in fact, be the most difficult challenge that a person must face in order to regain control over reckless credit card spending. Practically, it may be helpful to visit a debt counseling agency, a support group, or even a therapist in order to have some group support, accountability, and encouragement as you seek to break a pattern of behavior. Oftentimes, outside help can work wonders in motivating you to stick to the plan.
Step 2—Consider Consolidating Your Debt
If you have high credit card balances on multiple cards, you may want to consider consolidating those outstanding debts through a debt consolidation program. There are numerous programs around the country that help people secure lower interest rates and monthly payments, even on small business loans if you are a sole proprietor. Depending on your situation, a debt consolidation program could save you thousands of dollars by locking in those lower interest rates.
Step 3—Develop A Plan & Stick To It
It is imperative that you develop a repayment plan and stick to it. Dave Ramsey, Suze Orman, and other personal finance experts have a wealth of resources available to help people develop a “Get Out Of Debt Plan.” However, you can develop one yourself. Simply write out a monthly budget that details how and where you will spend. Commit to cutting expenses as much as is possible, and then direct all extra cash each month toward paying your debts. This won’t be fun, necessarily, but it will lead to true, financial control in the end.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.