Follow Simple Credit Debt Advice and Be Money-Smart
Twenty and bankrupt? Sound scary? Being twenty should mean dreams, brand new career, energy, fun and growing bank accounts! But debt and bankruptcy have become a gloomy reality today. Just check this statistic: nearly one quarter of all the bankruptcies filed in recent years were by by consumers under the age of 25. But why? Let's try and assess.
You are pursuing graduation. You own one or more credit cards. You are fun loving, swanky and smart. Sale at the fashion store, pizza and beer, coffee shops, fun with friends – why miss out on any of this when you have money? Plastic money, that is. What next? You are in a load of debt before you realize it. Every month you have multiple payments staring you in face. You are at loss for how to deal with the creditor calls. No solution? There's one – bankruptcy. So you were fun loving, swanky, smart – but now bankrupt with low a credit score harming your job prospects and a bleak financial future.
You don't want this to be your story, right? Being debt free is possible. You just need discipline, self control and the right credit debt advice. Here are the five most simple and effective tips on how to get out of debt:
1. Let's face it. Escapism is no escape route from debt. If you believe that ignoring debt will someday make you debt free, it's a myth. Don't run away – face the situation. Accept your mistakes. There is always a way out. You just need to take the right steps and get the right advice on credit card debt. Discuss with family, friends or debt help counselors and start right away.
2. Start now. If you believe that putting off your debts until you are forty is the best way to live a stress free life today, think again.
- Mounting debts can harm your credit ratings; your debts will become more expensive.
- You will most likely only qualify for a small mortgage when you plan to buy a house. Your dream house might just remain a dream.
- Paying for enormouse debt could leave you with nothing much to save. What will you do when you retire?
So start before it's too late.
3. Pay more than the minimum. Did you know that if you keep making just the minimum payments on the average credit card debt of $3,262 accrued by college graduates, you end up paying more than twice the actual amount spent by the time you pay the last instalment after 18 years? It is worth to pay $20 for the dress you purchased at the sale price of $10? So banish the myth that by paying the minimum you are actually repaying your debts. With accrued interest, your debt is growing larger and the credit card company is pocketing all the money. You can better utilize this money as an investment, saving or even spending. Plan today to repay all your outstanding credit card balances.
4. Budget. How many times have you looked at your credit card statement to assess the where's and how's of your expenditures? How many times have you noted that your expenses exceeded your income at the end of the month? If you are really serious about avoiding debt or overcoming debt, you must follow this credit debt advice as a habit.
A budget is a must-have weapon in the war against debt. It will keep you apprised of all the fixed and varied expenses that must be paid without fail so you know how much is left for other spending. Then, later in the month when you want to make unbudgeted expenditures, you will know whether you can afford it or not. So, at the beginning of the month, simply write down all of your fixed expenses, estimated variable expenses and all your sources of income. Then assess if you are spending more than your income.
A recent study by the Federal Reserve shows that an average American spends $1.22 for every $1 dollar that he earns! Do you need any other reason for the debt epidemic? Only a budget can make you aware of the fact that you are spending more than you earn. So prepare a budget and manage your finances smartly.
5. Shun that credit card. After getting ample advice on credit card debt, you have now decided to begin your credit card debt repayment in earnest, planned how you will go about doing it and also outlined a budget for yourself. Now can you afford to spend with plastic money once again? No. Stop and think before you swipe your card next time. If you keep repaying and spending, it is like trying to get out of a hole while you keep digging deeper. Spend only as much as you can afford to pay back. Still better, shun the cards altogether and use your prepaid debit card instead.
So start today. The first step is always the toughest, but soon you'll be cruising along the road to being debt free.
Questions and Answers
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