Wednesday, December 12, 2012

6 Steps to Reduce Your Worry about Credit Card Debt

A recent survey by myFICO found credit card debt is the top worry for consumers.  It well should be.  If you can’t afford to pay cash for your purchases, you can’t afford them.  It’s frustrating to accept this fact, and so easy to ignore and charge it anyway.  If I’m ruffling your feathers, maybe it’s time to pay attention to your money.  Here are some steps to get you started.

1.       Go online and check your most recent credit card statements.  All of them that are open or have balances. 

2.       Total up all the credit card balances.  How much do you owe?

3.       How much do you take home each month, or pay period?  How does that compare to how much credit card debt you have?  If you earn $45,000 a year after taxes, and owe the national average of $15,328, that means you owe what about a third of your annual income.  That just gave you MORE worry, didn’t it?  Knowledge is power, and now you know where you stand.  If you had no other bills or expenses, yeah right, it would take four months just to pay off the credit cards.

4.       Keep that credit card debt total handy – in your wallet or on your smartphone would be ideal.  You can even take the credit cards out of your wallet when you add in that piece of paper.  If you continue to charge, that number will get bigger with no source to pay it off.   I hear there’s a website featuring old rich guys who are close to kicking the bucket where you might find a new husband, but that’s material for a future Blog. Stop using credit.  Stop today.  No exceptions.  If you want to reduce worry, you have to take action to resolve the problem.

5.       Use this credit card payoff calculator to figure out realistically how long it would take to pay off all your credit card balances. 

6.       Stop using credit, and apply money saved to one of your bills.  It’s going to be a little bit easier to hit a target that does not keep moving further away.   

You’ll intensify your worry as long as you don’t tackle the debt problem.  Increase your power with knowledge on your circumstances, and take some small steps to make a positive change.  Even if you don’t have any extra money to pay towards debt today, at least stop adding more debt to the pile.  That first positive step will give you more control than you had in quite some time.