American households have an average of 5,700 dollars of credit card debt and can increase to around 16,000 dollars for households that do not pay their balance per month. However, while it is challenging it is possible to manage it with other financial responsibilities.
The following points will help you manage and hopefully pay off your credit card debt.
Firstly assess your debts and how it would be to manage them. Despite sounding easy, this can even prove to be a challenge to financial advisors.
In place of that, they make more general statements. A New York attorney by the name of Matthew Zimmelman states that if in six months you are unable to pay back your debts without liquidating an investment then you have excessive debt. Kelsa Dickey stated that if too much money is put towards payments, then the debt is too much. Kelsa is a budget coach with Fiscal Fitness, and she goes on to say that the debt is too much if it also makes you spend money that was saved for a vacation or forces leaving a job you hate.
Another major step to manage debt is also to make a budget. A 7 Pillars Financial Coach, Christine Luken states that a budget helps keep people on track. Kelsi Dickey states that people need to organise themselves to organise their debt and to see how much money they have each month for their debt.
Financial Advisors like Christine Luken advise people to avoid certain behaviour. Like not using credit cards and switch to other payment methods for example debit cards. Alternatively Kelsa Dickey advises against removing all money from your checking account to pay off debt because later on other expenses could come up and that it is better to plan ahead.
While consolidation programs of debt may seem like a good option but most financial experts do not advise using them and point out several problems with using them. Zimmelman stated that it could be difficult for paying the debt off due to programs like these taking away fees from the top. Also, they make you vulnerable to creditors who can take you to court.
Also, these programs do not always counter the psychological issues that lead to the credit card debt. Kelsa Dickey stated that debt is the symptom of a larger problem and that the main reason for credit card debt is a failure to manage money.
After paying off the debt you have to try to avoid getting large debts again. According to Christine Luken, it is a good strategy to limit the cars you carry. Specifically one with a smaller limit or a secured card. These options provide the benefit that in case of a financial crisis the bank can use the savings account to pay off the debt.
Michael Zimmelman also suggests psychologically enforcing a healthy mindset such as by taking pride in the fact that you paid off your debt. Kelsa Dickey suggests to plan, and the key to eliminating your credit card debt is managing your debt.