Credit cards are certainly very handy these days. Who wants to carry round a wallet stuffed with bank notes when you can carry round a piece of plastic that serves the same purpose only better. Indeed, using your credit card has been incentivized to the extent that you can earn frequent flyer miles or this kind of credit or that type of bonus. You'd be mad not to use a credit card, especially since it is so easy to get one, or two or ten. However because everything is so easy this can lead to problems like debt. People that aren't careful with their spending and finances can get into some serious debt with credit cards. This article will cover how to eliminate credit card debt.
Credit card debt occurs on two fronts. People over extend themselves by buying stuff on credit when they don't have the money to pay for it. They voluntarily go into debt. Then they fail to pay off the monthly interest charges on this debt. This increases the overall cost of the items they bought and makes the debt even larger.
As easy as it is, they have dug themselves in a big debt hole and they reach a point where they realize just how big the hole is. As the saying goes, the first thing you need to do when you realize this is to stop digging. In terms of credit card debt, stopping digging involves setting up a budget and sticking to it.
Setting a budget might be seen as dull or boring but all it does is give you the information to make good decisions. And good decisions lead to more freedom. Having a budget will allow you to go on that summer vacation to the Caribbean. Not having a budget will mean watching big brother on TV for the summer. I know what I'd prefer.
So, a budget is simple. Subtract the amount of money that you spend each month from the amount of money that you earn each month. You want this to be a positive number. If it isn't then you have to start making some changes to your spending habits.
Figure out the total cost of all your essential needs. These are things like your mortgage or rent each month. How much it costs to run a car, commuting costs, cost of food etc. In short, essential needs are food, shelter and a means of getting to work to earn an income. Then subtract this amount from your monthly income. This gives you the total amount of money that you can spend creatively.
If you have any debts, be they credit cards or otherwise, then this surplus money should go towards paying off the debt. You might not be able to give much initially but it's a start and by sticking to it the debt will come down. The money can also be used to indulge you shopping lust but don't go into debt to satisfy this need. A budget is about knowing how to live within your means.
When you have this information at your grasp then it is easy to know what you can and can't afford. However, the budget is no good if you don't follow it. You need to stay within budget every month until you have reduced your debt.
If you still find it hard to control your credit card spending then another check and balance is to get a debit card instead. This only works if you have the money in your account to pay for your purchase.
Credit card debt occurs on two fronts. People over extend themselves by buying stuff on credit when they don't have the money to pay for it. They voluntarily go into debt. Then they fail to pay off the monthly interest charges on this debt. This increases the overall cost of the items they bought and makes the debt even larger.
As easy as it is, they have dug themselves in a big debt hole and they reach a point where they realize just how big the hole is. As the saying goes, the first thing you need to do when you realize this is to stop digging. In terms of credit card debt, stopping digging involves setting up a budget and sticking to it.
Setting a budget might be seen as dull or boring but all it does is give you the information to make good decisions. And good decisions lead to more freedom. Having a budget will allow you to go on that summer vacation to the Caribbean. Not having a budget will mean watching big brother on TV for the summer. I know what I'd prefer.
So, a budget is simple. Subtract the amount of money that you spend each month from the amount of money that you earn each month. You want this to be a positive number. If it isn't then you have to start making some changes to your spending habits.
Figure out the total cost of all your essential needs. These are things like your mortgage or rent each month. How much it costs to run a car, commuting costs, cost of food etc. In short, essential needs are food, shelter and a means of getting to work to earn an income. Then subtract this amount from your monthly income. This gives you the total amount of money that you can spend creatively.
If you have any debts, be they credit cards or otherwise, then this surplus money should go towards paying off the debt. You might not be able to give much initially but it's a start and by sticking to it the debt will come down. The money can also be used to indulge you shopping lust but don't go into debt to satisfy this need. A budget is about knowing how to live within your means.
When you have this information at your grasp then it is easy to know what you can and can't afford. However, the budget is no good if you don't follow it. You need to stay within budget every month until you have reduced your debt.
If you still find it hard to control your credit card spending then another check and balance is to get a debit card instead. This only works if you have the money in your account to pay for your purchase.
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