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Debt Problems and Debt Management Credit Card Debt Management
Many times people will look at a credit card and see only the ease and convenience with which they can painlessly get the things that they want. When asked to list their debts, people will list their mortgage payments, their car payments, and other installment loans, and not list their credit cards.
The fact is that the balance on a credit card is the amount of the debt (NOT THE MINIMUM MONTHLY PAYMENT)...and that debt only increases each time an interest charge or a late charge is added. Paying only the minimum on a credit card balance will mean that it will be many years before that debt is paid off.
It is astounding, but a great many people have no idea what the interest rate that is charged by their credit card companies or whether that interest rate is simple or compound interest. (It's compound...and it is well above the national interest rate.)
Too many households in America carry far too much credit card debt. Seventy-five percent of households, in a recent study of American spending habits, are carrying a substantial amount of credit card debt. (Only 41% of American households have saving accounts.)
Now, don't misunderstand me...I am not knocking credit cards. I have a few of my own and I use them almost every month. Credit cards are practically as essential as an automobile in today's world, and if one does business or shops on the Internet, a credit card is indispensable. I also pay the balance before the credit card companies can charge a penny of interest.
Paying interest means that everything that you buy on a credit card cost you more than it would have cost if you had simply paid cash or written a check for it.
The best rule is to pay as you go. Use your credit cards, but pay balances before interest is added.
See Also:
Debt Management Wiggle Room
| Is Debt Consolidation Your Debt Management Answer Debt Management by Negotiation
Negotiation is an ancient art, but that art is not the kind of negotiation that we are talking about here. You have very likely seen the advertisements by companies claiming that through negotiation they can eliminate you credit card debt by getting the issuing companies to settle for mere pennies on the dollar or what you actually owe them.
These debt negotiation advertisements will sometimes claim that this will not negatively affect your credit score and that you can continue to secure additional credit even while this negotiation process is going on.
Well...not quite. While it is true that debt negotiation is an alternative to declaring bankruptcy, both are last-ditch efforts to resolve financial problems.
If you are considering using a debt negotiation company to help with your own financial difficulties, you would be very wise to do three things before you sign on the dotted line.
1. Check with the Better Business Bureau (BBB) about the company you are considering signing on with. If there have been complaints by other clients, the BBB will have a record of them.
2. Check with the Attorney General of the state in which you reside. You can find out if debt negotiation companies are required to be licensed in your state and if the company you are considering does in fact have a license.
3. Read the fine print. Before you sign an agreement, you need to fully understand what you are agreeing to and what services you will be paying for. FREE in big letters in the advertisement is not necessarily what is written in the fine print on the actual contract that you sign.
Yes, heavy debt is a burden that you want some relief from. But be sure that the relief is the real thing and not something that is only going to cause you more problems in the future. |
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| Credit Card Debt Management Debt Management: The Controls
Managing debt is very much like driving a car. When you drive a car, you must know where you are going, keep your hands on the steering wheel, your eyes on the road ahead, look behind you, and watch your speed. That is the way that you control a car, and controlling debt is done in the very same way.
Know where you are going: You and your spouse or significant other need to sit down and define your financial goals so that everybody knows what the destination is. With specific goals in mind, the route to achieving them will be easier to define.
Keep your hands on the steering wheel: The steering wheel of debt management is the family budget. A clear allotment of funds will keep your financial life on the road and going in the right direction.
Keep your eyes on the road ahead: To avoid accidents, you need to be prepared to stop or take evasive action when driving a car. The same is true of debt management. You need to save first and spend second.
Look behind you: We always learn more from the mistakes we have made in the past, and we can learn from the things that we did right as well. Remember where you have been so that you can better see where you are going. Gauging progress inspires us all to do better.
Watch your speed: You don't want to try to go too fast when achieving your financial goals. You need to live well today, as well. But you don't want to poke along in the slow lane, either. Set a speed and stay in control of that speed. Save on a regular basis so that your goals may be achieved...but enjoy the trip, too. |
Related Topics: Debt Consolidation Loans-Yes or No,
Debt Management Agreements-The Pitfalls, Free vs Paid Debt Management Services
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