Credit Cards and Debt

2008 was a rocky financial year for most everyone in this country. Many were at a loss for what to make of their economic futures. With 2009 upon them, consumers are looking ahead and trying to chart a course for their financial security. Some have spent within their means and will be able to recover. Others have racked up debt on their credit cards and are seeking ways to reduce or erase that debt. It is estimated that the average number of credit cards per consumer in this country is four. Credit cards are a common way of making purchases. If utilized appropriately, they are a handy resource. But credit cards can also offer an opportunity to overspend. Once debt is accumulated, it takes a disciplined routine to climb out of it.
The first step to reducing and eliminating debt on your credit cards is to stop making purchases on the cards. It seems obvious, but it is extremely difficult to pay down debt when you are accumulating more. Do not open accounts for new credit cards when you stop using the current ones either. Simply change your habits. Start using your check book, debit card or paying with cash. Your next step is to analyze your finances and figure out what you can live without in order to free up some funds. The easiest way to do this is to cut your discretionary spending. Start taking your lunch to work, making your own coffee and get rid of unnecessary entertainment expenses. Take the money you save on those discretionary items and put it toward the balances on your credit cards. You may need to temporarily take on additional income opportunities, if you find that you have no discretionary expenses to reduce.
After you have a handle on your budget, develop a routine of slowly paying down the debt on your credit cards. Always pay more than the required monthly minimum on your balances. When you make only the minimum payment, you are paying a significant amount of interest. You will actually start chipping away at the balance, when you make more than the minimum payments. Work on the card with the least amount of debt first, if you have debt on several credit cards. It is much easier to focus on one card at a time, and you will be encouraged to move onto another card once you pay one off. Whenever you have extra money, make an extra payment on your credit cards. Once you start paying off your credit cards, close the newest ones and keep the oldest. A card that has a long and solid history with you will help your credit score. Keep up this routine until all your credit cards are paid off. If you start using your cards again, remember how hard it was to pay off debt. Stay on top of your balances and use your card wisely. Remember that you will have to pay for everything you put on your credit cards.