Tips On How To Sensibly Avoid Credit Card Debt
Credit card debt is one of the worst problems a person can have. Nowadays, thousands of Americans are struggling with it and many believe that it is irreparable. Debt just seems to put a damper on everything you do in your day to day life, food doesn't taste the same, going out for dinner is a struggle and even buying your kids a few gifts seems like a bit too much. So, why not avoid getting into debt all together? Holly Johnson from The Simple Dollar tells us that “Americans continue to dig a deeper hole when it comes to credit card debt . According to the Federal Reserve and other government statistics, our penchant for indebtedness means that the average household now owes $7,281 in credit card debt alone. But here’s the thing – that average includes even those who carry no debt at all. So when you take out the households and families that don’t carry a balance on any of their credit cards, the Average outstanding balance surges to $15,609.” This is a very troubling statistic due to the fact that Americans are burying themselves deeper in debt instead of learning from their mistakes. To avoid these credit card debt mistakes, here is short list of tips to avoid credit card debt:
1. Try not to miss any payments
Missing payments on your credit debt is a dangerous thing to do. Often times, the first thing people ask when it comes to credit card debt and missing payments is can you go to jail for credit card debt ? Erica Sandberg from Credit Cards dot com gives us a very straightforward answer, “If you're worried about spending time behind bars for not paying your credit card debt, know that there is no debtor's prison in the United States. However, there are other legal repercussions of which you should be aware. A creditor can sue you in a court of law, and if they are granted a judgment, they may be able to garnish your wages or take nonexempt property and assets. Living debt free is within every card holder's capability. The key is to always be aware of charging and balances, and address credit problems immediately.” Even though you can't go to jail should you have debt problems it is probable that you have big issues to worry about. Your creditors have the power to sue you in order to seize assets or garnish wages, so, in essence, these creditors have the power to take your home and leave you out on the street.2. Only charge what you can afford to make payments on
Before you swipe your card and spend more than you should, think about what you're doing. Spending more than what you can afford to pay will set yourself up for problems. Since knowing how much you can afford to charge on your credit card is something completely subjective it is important to do some research. Not everyone will have the same budget, it all depends on how much you spend, your income, your credit limit and any other credit card balances you may have.3. Limit your number of credit cards
Knowing how many credit cards you should have in order to avoid credit debt is something many people take too lightly. Most households in the US have multiple credit cards that are used almost everyday. Taking into account what was said in tip #1, having multiple credit cards can be difficult to manage and complete payments on time in hard times. Robinspost.com recently talked about a troubling trend surging among debt collectors “ The Federal Trade Commission and a number of other law enforcement agencies have taken action against 30 debt collectors accused of deceptive and abusive tactics, including harassing phone calls and false threats of litigation, arrest, and wage garnishment. Some of the collectors are accused of knowingly attempting to collect so-called phantom debts – phony debts that consumers do not actually owe. Others failed to give consumers legally required disclosures and notices, or to follow state and local licensing requirements.” The more credit cards you have under your name, the higher the risk of something like this happening to you. It is simple, if you only have 1-2 credit cards then it should be easier for you to stay up to date with your credit card debt balances and payments.Make a Budget
Making a budget is one of the most under appreciated aspects of avoiding debt. When you have a budget, it gives you a clear picture of what you should spend money on and what seems like overkill. Making a budget is fairly easy, it takes a short amount of time and the use of a calculator. Start off with your base income, and start subtracting the money you're spending each month. If you end up with a negative number, then you know you have to change something in order to save money. The most important thing about finances is knowing that you cannot spend more money than what you make. A budget will give you straightforward answer to the question “where is my money going?”. At the end of the day, it's always better to avoid a problem if you can. The worst thing you can possibly do is ignore the situation and hope it goes away. This is a serious issue because you are doing nothing to improve your credit card debt situation. Not avoiding credit card debt and simply making the minimum payments will not get you very far. The majority of the cash you pay goes towards the interest rates. This means that your only providing your creditors with profit instead of helping yourself out of the debt trap. So before you decide to swipe that credit card be certain to refer to our these helpful tips. Debt Relief Options When people find themselves in deep with their credit card debt the usually do one of these things listed:
-
File Bankruptcy (Chapter 7 or Chapter 13)
Debt management program
Debt settlement / Debt negotiation
Take out a Personal Loan
Do Nothing
