You Are on the Debt Road?
As debt continues to increase in many households across America, more families each year are finding themselves looking for ways to reduce their overall household debt. For some, this may be easier said than done. Debt reduction requires a lot of hard work and dedication. Especially when you are used to spending money left and right.
Your credit card expenses increase while your income is the same or decreasing. When this happens stop using your cards and manage on whatever cash you have available. Stop when the cash is finished unless there is a great emergency – do not take out the cards. Diminishing income will suffer greatly if the bills of the credit card are added to it; get away from card shopping till your income stabilizes.
You are unable to pay more than your minimum balance on the card debts; this is when it should be obvious that cash problem has started; this is the time when you should leave the credit cards and try to pay off all your outstanding by wise financial management.
You find yourself borrowing on one card to pay on another. This is the message that you are entering unmanageable debt – so take charge and control all unnecessary expenses right away. Try to pay off the debt of one card and use only one card – that also only in acute emergency.
You observe that you have more than 5-6 credit cards. Ideally, you should not have or use more than two credit cards. There are many who advocate the use of only one card while – if you have more – you can keep the rest locked for any emergency. When you have too many operational cards, you can very easily over spend and find yourself in a financial mess.
You are finding that you are using your credit more and more for emergency payments – and the emergency payments include grocery bills. The moment you include in the emergency payment list ordinary purchases, you should understand that something is seriously.
Your credit card payments keep you working overtime – if you observe that you do not have sufficient funds to cover your credit card payments – that means you are extending your income to your credit card limits – this is a definitely a danger signal.
You are at limit of all your credit cards. When you find yourself to have topped the limits of your credit cards –this obviously shows you that your income is not sufficient to take care of your expenses – and or you are spending too much.
You are gambling and paying the debts with the credit cards. Never ever pay your gambling debts with the credit cards because this will really create an egg-and-chicken vicious circle from where you will never get out.
How To Reduce Your Debt
Those that are serious and committed to reducing their debt will eventually reap the rewards of being debt free. Reading my simple tips will give you many ideas, about how you can reduce your debt.
When you start to cut back on spending, you will find corners that you can cut through out the month, to help you pay off your debts. Simple things such as, being aware of all of the electricity you use, and turning off lights that are not needed as you leave a room, will help reduce your light bill, therefore, you save a little more money to reduce your debt with. Once you become aware of your spending habits, and start cutting back, you will start to notice more ways to cut back each month.
Budget your income. List all of your monthly bills and their due dates. Apply them to your budget, as well as other household needs, for example, groceries, gas etc. Allow yourself only so much money per month to spend on extras. Sticking to your budget will show self control, and determination for reducing your debt.
Limit the use of your Credit cards
If you can not pay cash for it, then do not buy it. If you have to charge something, make sure that you can pay the balance in full when your next credit card bill comes in. Never charge on your credit card to only pay the minimum monthly amount. You will never get that maxed out credit card paid off that way. The importance of paying your credit card balance in full, can not be stressed enough.
Get rid of your credit cards
If you are determined to reduce your debt, cutting up your credit cards will help. If you do not have them, you can not use them. If this is too big of a step for you, at least get rid of the unnecessary ones. Keeping only one or two, low interest rate cards for emergencies only, is a good idea. Remember if you can not pay cash for something, then you probably do not need it.
Pay off your debts
If you have already acquired some debt you need to pay off, now is the time to get started. Decide which debt is your smallest and start with that one. Pay on it as your budget will allow. Once you have gotten your smallest debt paid off, you will have a feeling of satisfaction and know that you can pay off your debts. Then move to the next smallest debt, when you are paying them off one by one, it is easier to do, with out feeling over whelmed. Before you know it, all of your debts will be paid and you will feel great about knowing you paid them off.
Debt consolidation is another option to look at for reducing your debt. Debt consolidation companies, will call your creditors for you, and make payment arrangements for your debts. Many companies will get you one low monthly payment to pay each month, until all of your debt is paid off.
Make an appointment with a financial counselor to help you reduce your debt. Some people find, having someone else point out the errors in their spending habits to help tremendously. Financial counselors can also show you how to better manage your money, and stick to a budget.