Owning a credit card gives the feeling of superiority and financial prosperity. While it’s easy to whip out a credit card, most people create a debt trap from which they find it difficult to extricate from. Unfortunately, the family cavorting on the beach pictured in advertisements is anything but true. A credit card is convenient, but it does not say anything about the owner flashing it in public.
While interest rates on mortgages and car loans have gone down, the interest rate on cards remains stubbornly high. Students just entering high school are targeted by credit card issuers to get a card well before they understand the implications of debt. Credit card companies prey on the desires of students who want to belong to a group and are willing to charge on credit to have the latest technology.
The average family owns up to 17 different credit cards. This kind of buying power adds up to a massive debt load that few find easy to pay off. Few people have the kind of discipline to say no to items they can’t afford. Managing debt is important in today’s world where so many have lost homes and jobs.
Know your spending limit
In the old days, it was customary to only buy what you could afford. That advice is still true today. A credit card should not be used to buy luxury items unless the charges can be paid up at the end of the grace period. Yet so many use credit to buy vacations, appliances, furniture and other high priced items without much thought that such items will cost far more than just the sticker price.
Keep the payments in mind before purchasing
Most people see the purchase price of an item without giving thought to the payments required once the bill arrives. The item on sale appeals with its presentation, color and sale price. It appeals to human greed. Few people ever give themselves time to think whether they really need the item they feel they must have.
Budget your payments
If you are in debt, you must have a budget to help you control spending. A good rule to getting your financial house in order is to pay off the minimum for most cards, but pay more toward the card with a higher interest rate. Once the card is paid off, you can then target another by adding the payments to the first card to the minimum on the second card. You can also choose to pay off the card on which you have the lowest balance first.
A need to sacrifice
If your debts are critical, cutting up the cards may be the best solution to curb your spending. You can choose to contact your credit card issuer to arrange a new payment schedule. Getting a loan is only possible if your credit score is in good standing, though for most people, it’s unlikely they can secure any loan at all. A consolidation loan can help reduce the pressure of paying several cards every month. No matter what you do, sacrifices must be made. Getting on a cash only basis will help you speed up your debt payments.
Paying debt together
Financial trouble is the main reason for many divorces. For the family, debt applies to all members. All members should take full responsibility and work together to reduce the debt load. If you’re single, you should consult with parents, relatives or even get some debt counseling. No one needs to blame someone for their predicament. Only a coordinated effort will help reduce debt and help establish a strategy to never get into debt again.