The Pitfalls of Credit Card Debt

It's easy to let debt get out hand. Take action before it does.

By Gary Foreman


The sad thing is that many people fall into credit card debt because they can't afford to completely pay for whatever they bought during the month. The interest that you owe only makes the original purchase more expensive.


The hill you are climbing just got a little steeper.


What to do? Take aggressive steps to pay down your credit card balance. Beginning now.


Drastic Measures

The biggest opportunities are where you spend the most. It may be time to move to a smaller home or apartment or take in a roommate. Or you might consider replacing an expensive car with a cheaper one. Review the cost of your homeowners’ and auto insurance with your insurance agent.


Some of these suggestions may seem extreme, but they are meant to be. You could be heading for a financial wreck.


Less drastic measures include committing to eat at home until your debt is paid off. It may be time to consider dropping premium cable channels, mocha lattes and other non-essentials. You will be surprised how quickly these items can add up to a sizeable amount.


Not only will you be reducing debt, you will feel better about taking steps to reach your goal.


A Financial Trainwreck

Trouble could be around the corner and here is how it will unfold. “Unexpected expenses” will add to your balance and your monthly minimum payments. It could get to the point that you are unable to make the monthly payment.


Things will snowball. Each month you will struggle to make all the minimum payments on time. One day a payment will be a little late. Your interest rates will go up on all your cards, which will increase the minimum payment. Your credit rating will go down and you will trigger a chain of events that will take up to ten years to correct.


You would be wise to correct this course while you have time. Some of the steps you will need to take will be painful, but you will avoid much more financial pain in the future.


Take these steps deliberately. Pay your credit cards on time even as you tighten your belt. Be consistent and serious. Don’t give up. Very soon the hill will start to level off and your load will be far lighter.

Gary Foreman is a former financial planner who currently edits The Dollar website. You'll find hundreds of ways to help make the most of the money you already earn.