Managing Debt

In 1968, the total credit card debt of consumers was nearly $8 billion. Today that amounts exceeds a staggering $880 billion.

Getting out of debt is very much the financial equivalent of trying to quit smoking: an extremely arduous and lengthy process. But in order to get out of debt, you must first stop accumulating it. Spending can be a hard habit to break and while good intentions are the first step, they alone are not sufficient to break your cycle of spending and subsequent debt.

One of the best ways to quit accruing debt is to stop carrying around the plastic: leave the credit cards at home. Instead, budget a given amount of cash for you to use throughout the week. You will find that you make better purchasing decisions and are far more conservative in your spending since you have a preset limit.

Store your credit cards in a place that is not easily accessible. As a college student who was constantly and irresponsibly incurring debt, I would freeze my credit cards in a block of ice left in the freezer. This enabled me to curb my reckless spending while still being able to be in possession of the card in case of an emergency.

Next, much to the chagrin of individuals in debt everywhere, you must start that unpleasant chore of confronting your debt. Organize it by listing each card or debt along with the balance, minimum payment, and interest rate. This will help you know where to start; tackle the card with the highest interest rate first, paying as much as you can afford each month, while making the minimum payments on any other cards you may have.

And as for those minimum payments, set up automatic or scheduled payments to ensure each one is paid on time. Late payments are the cardinal sin of paying off debt. Not only will you get smacked with hefty penalty and late fees (as high as 30%), but your overall credit score will take a hit as well.

There are also a number of other debt management methods that you may find useful. A debt consolidation service may be beneficial if you have multiple cards with large balances or if you are financially unable to make all your payments. For homeowners, the Money Merge Account system is ideal because it enables them to pay off their mortgage in a fraction of the time (generally the biggest debt most Americans will ever incur) providing faster financial stability and security.

Whatever method you may use to get out of debt, make sure it is one you will have enough self-motivation to stick with. Once the burden of debt has been removed, you will be able to enjoy financial freedom.

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