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. The classic mistakes that most people fall into with credit card debt is that they over spend on the credit card initially. They buy themselves into debt.
Then they either ignore the monthly interest payments on the cards or they can't afford to pay them. This builds up the debt and means that they pay more for the items they bought than if they had saved up and bought them outright. For many people this is a big hole that they can rightly claim to be all their own work. And as the saying goes, when you are in a big hole the first thing you need to do is stop digging.
When it comes to credit card debt the way to stop digging is to set a budget. Creating a budget is not the most exciting thing to do in life but that's not the point. A budget gives you information that can help you make the right financial decisions on your spending habits and what to buy and not to buy. 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. Work out how much you spend on essential items. These are rent or mortgage payments, car payments or commuting/public transport costs, utility bills, grocery bills.
Basically, you need shelter, you need to eat and you need to work to earn money. All these things are essential. Take the total cost of these items away from your monthly income. What you have left over is money you can spend. 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 know how much you can spend each month you can make decisions on what you can and can't buy. Setting the budget is the start, but you have to be disciplined enough to stay the course and stick to the budget until your debt is cleared. If discipline is a failing of yours, especially when it comes to credit cards, then think about getting a debit card instead.
Learn more ways to avoid going bankrupt and simple ways to get out of debt.
