How to Steer Clear of Credit Card Debt

Wednesday, October 30, 2013

Avoid credit card debt

Let’s face it. Credit cards have become a way of life.  How many times have you heard someone say, “Oh, I don’t carry cash”.  Some have become dependent on credit cards and use them for all their purchases and daily expenses.  The danger of credit card use, but more to the fact of misuse is the fact that debt can quickly add up.  

The credit card industry now offers incentives to use their cards.  From cash back cards to air miles cards, plastic money is just as common as cash these days.  We are approaching a consumer nation reaching for a deal.  However, untracked spending can drive people into debt.  Some people left untracked spend beyond their means.  This is not just a few people in Canada; this issue has become a major trend for our society in general.

The good news is that not all credit card users are in debt.  There are a few sure-fire ways to make sure that you do not fall victim to credit card debt.

  1. The best way to stay debt-free is by managing finances wisely. This requires setting up a budget plan and following it!  People should determine their expenses with regards to their income, and make sure their expenses do not exceed their budget. This may seem like simple advice, but very few people actually acknowledge and follow it.

  2. People should begin by outlining their total income and making a list of all household expenses. Expenses like bills - gas, phone, cable, electric and then other daily expenses should also be included into the list. The cost of expenses like gym and club memberships, groceries and all other expenses should be budgeted as well. Once this is done, these expenses should be deducted from the overall income. If the obtained figure is running in the negative, it means that the budget needs to be reworked.

  3. Once the budget has been decided and set, card holders should make sure they remain loyal to it. This will also give them the flexibility to use their credit card for any expenses.

  4. Credit card holders should always remember to use the card as though they are spending cash. Most importantly, they should remember not to add any extra spending to it. Plastic money empowers us, but the debt that comes with it can turn life into a nightmare if not used wisely.

  5. Pay your statement before it is due.  This will ensure that you are tracking your spending, and you know what you are spending your money on.  Having a tracking system will allow you to see if you are actually staying within the parameters that you have set out in the budget.

Credit card debt is very scary.  It is easy to spiral out of control with the imagination of free borrowing.  Credit cards make their money when people do not manage to pay the entire amount at the end of the month.  Paying over 18% interest on purchases will be a detriment to paying off the amount.
Spend and borrow wisely!