Americans are quick to complain about the federal deficit and support budgets cuts to curb government spending. Economists agree, the US cannot continue spending more than it takes in. Yet many of the same people clamoring about government over-spending are guilty of doing the exact same thing on a personal level.
Credit card debt is a major problem in the US,and with high unemployment, too many people are living on credit. According to the American Bankers Association, the average family today carries $8,000 in credit card debt.
Well known financial guru Dave Ramsey makes getting out of debt sound easy, but it seems almost impossible for some people. Most individuals are not in debt because they want to be, they are in debt because their lifestyle costs more than their income and they don’t know what to cut to save money.
“There is no positive side to credit card use,” said Ramsey. “You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! But most families don’t pay on time. Personal finance is 80% behavior. You need to cut out habits that make you spend more. You do not build wealth with credit cards. Use common sense. When you play with a multi-billion dollar industry and you think you’re going to win at their game, you are naive. You cannot beat the credit card companies.”
Out of control credit card debt and late payments can lead to stress, a lower credit score, higher interest rates, penalty fees and bankruptcy. Getting out of debt means spending less and saying no to yourself, your kids and items that are not essential.
There are a lot of ways to save money. Most people can live with 150 TV channels instead of 350; you can buy the generic brand at the grocery store, shop sale racks, consignment shops or Goodwill for clothes, get a less expensive cell phone plan and stay within the minute limits (no matter how hard that sounds). And one of the worst mistakes people make is buying impulse items just because they’re cheap. It adds up to much more than you think.
Financial experts and common sense concur; if you leave your credit cards home you will spend less money. And while you’re home, turn off some lights and raise the thermostat on your air conditioning a few degrees. Not only will it save money on your electric bill, you’ll be helping the environment as well.
No one ever said getting out of debt was easy, but the rewards are well worth the sacrifices. Ramsey believes that when you get to that last payment on your credit card statement, you will know you have earned your freedom. The money you save on interest alone may buy you more than a few luxuries; it can buy you peace of mind.