If you are like millions of other Americans, chances are that you are carrying around some debt on your credit cards. As of March 2010, U.S. revolving debt equaled $852.6 billion, 98% of which was from credit cards, and the average household carried $16,007 in credit card debt. That’s a lot of debt to have hanging over one’s head! With the economy the way it is, jobs being lost, and houses being foreclosed on, it’s a difficult time to try to get ahead and out of debt. But it’s vital that anyone who is in debt works to get out from underneath it, so I wanted to put together a list of things that could maybe help people get out of debt faster than if they were doing it without a plan. A long time ago I wrote a series called “The Start Digging Out Of Credit Card Debt Challenge” which you may want to check out in addition to what is to follow.
What should you do if you find yourself overburdened with credit card debt and you are having trouble keeping up with all the payments? It may be time to consider debt consolidation to make your debt easier to manage, easier to track, and to potentially lower your monthly payments while you get back on track. I am a huge proponent of paying off your debt rather than just filing bankruptcy, so debt consolidation is something I preach about quite often. When I was in debt up to my eyeballs, I did all sorts of balancing acts to consolidate my debt to get it paid off, so I figured I could post about some to maybe help some readers out.
I know, I know – every financial website and magazine out there makes it seem like carrying debt is a prison sentence. They make it sound like it’s the end of the world, like a deep dark hole you can never climb out of, and like you can never accomplish anything unless you rid yourself of any and all debt. I am here to tell you that they are all wrong – debt is not the end, not a death sentence, and not something that should stop you from achieving your dreams. Carrying debt, and trying to climb your way out of it, is like any other adverse condition we face in life. If you were going hungry, you would find a way to eat. If you lost your job, you would work incredibly hard to find another employment opportunity. Having debt is no different – you must find a way to “solve” the problem, work hard at it, start seeing the end result, and continue to move towards it. It is not a horrible, scary, life-threatening disease – it’s debt… and you can get rid of it if you are willing to try and not be scared off by punditry.
This weekend I sat down to find something to stream from Netflix and came across the documentary Maxed Out, which is about credit card debt and how it has affected every day Americans. While painful to watch, it just confirmed my thoughts about debt – it’s a pain in the ass. From small town families who can no longer make the minimum payments due to job loss, all the way up to the Federal Government, it seems that while debt has become the standard way of life, it has some very ugly side effects. The film, while concentrating on the credit card industry for much of it, does also touch on real estate greed, how some people feel they “deserve” all the stuff they cannot afford, and how predatory lenders and check cashing schemes can make anyone’s debt situation even worse than it already is.
How many of you are carrying around debt that dictates how you live your life? I am sure there are many out there, for sure. I was one of them too – in my twenties and very early thirties I had about $25,000 in credit card debt to my name. I had no choice but to live where I was living, drive what I was driving, and stay at a job I absolutely hated – all because I owed so much money to the credit cards. Had an emergency come up I would have been absolutely screwed…and a few years ago I swore I would stop all that nonsense. I paid off the debt, moved to a town I wanted to live in, and quit the job I hated to strike out on my own. I have never looked back and I don’t plan on doing so anytime soon if I can help it. But the only way I could even attempt it is by not carrying around any consumer debt (other than my car payment, which I hope to get rid of this year as well) and not falling back into the debt trap. One of the major keys to living the type of life you want to lead is to not owe money. I am not too concerned with auto loans or mortgages, as most of the time the bigger ticket items do require you to borrow some money. (Last time I checked, no one I know bought their $300,000 house in cash.) If you are hanging on by a thread with a pile of debt to pay off, you are letting debt dictate your life – and that’s no way to live.