Credit card crisis – 3 steps to ease the strain
Taking care of you means taking care of your finances. In this day and age, it is much too easy to drown in debt. No one likes the feeling of being financially over-extended.
According to research done by Nerd Wallet the average American family carries about $16,000 of credit card debt which means that unless the credit cards are paid off in full each month, that same household is spending about $1300 a year on interest charges. That is a lot of money that could be in your pocket instead of in the bank’s coffers.
Without looking at a bank statement, do you know how much you owe on your credit cards? If not, maybe you should look. If you do know, do you have a plan to pay it off as quickly as you can? You probably know that credit cards carry some of the highest interest rates around and unless you pay off your minimum balance each month, you are paying outrageous interest to the banks. This is not how you want to be spending your hard earned money. Being aware of your financial reality is the first step towards owning your financial future.
Truth be told, I am not a fan of credit cards, even though I know they have their benefits and uses, they can also cause a lot of stress due to ‘operator overload’. That would be the owner of the credit card shopping and spending when they would be better off looking and saving. I’m sure you know the scenario.
If your credit cards are red hot from over use, it’s time to get your financial house in order. Here are three tips that make good financial sense, and can at least be a starting point.
- Talk to your bank about paying down whatever you owe as fast as you can. Any interest you don’t pay the bank, is money in your pocket, for you and your family. According to Suze Orman, most American banks are charging interest in the range of 15% – 20%. That is an outrageous price to pay if you are not paying off your credit cards completely each month.
- Seriously give some thought to reducing the number of credit cards you have in your wallet. For every card you have, you have to make sure you track the payment dates, balances and limits. Fewer cards means less follow up for you, which saves time, hassle and stress.
- Maybe it’s time to re-think how you use your credit cards. My personal favourite suggestion is to stop shopping just for the sake of shopping. Take a good hard look at your life. Do you really need more stuff? Do you need more dustables? Seriously, give it some thought. Leave the credit cards at home the next time you take a trip to the mall. If you don’t have enough cash to pay for it, and it’s not a matter of survival, like groceries or medicines, then maybe you don’t really need it, you just really want it. Part of taking care of you is recognizing the differences between needs and wants!
As you know, a financial planner I am not, so if you are drowning in debt, then get some help. The best place to start is your bank, or check out Suze Orman’s website, she has lots of great ideas and suggestions. Either way, take action to get this issue sorted.
Keeping in mind that if our goal is to take care of us then having our financial house in order is key. If you are over-extended with your credit cards, then taking any small step in order to sort it out is a step in the right direction. Start where you are and move forward from there. Don’t beat yourself up for actions already taken, give yourself credit for taking responsibility and moving forward.
I just want you to have the peace of mind in knowing that you have got the credit card monster under control.
Until next week,