HOW LONG DOES IT TAKE TO GET OUT OF CREDIT CARD DEBT?
In a book that I am reading called “Debt-Free Forever” written by Gail Vaz-Oxlade, there is a tip that I wanted to share with you. “While it may have become socially acceptable to make only the minimum payments required on our debt, this is a really bad idea. Making only the minimum payment each month is like being caught in a hamster wheel: you’re constantly running, but you never get anywhere. Minimum monthly payments amounts have been designed to make your debt linger so lenders profit. Low minimum amounts free up cash flow and encourage people to spend more money.”
When you’re serious about paying off your credit cards, the amount of time it takes will vary. It depends on how much debt you have accumulated, how much money is left over after paying your fixed expenses, what you are willing to live without for a while, if you use a credit counseling agency, if you are disciplined enough not to use the credit cards as you pay them down, and so on.
There are people that have small balances on 2 or so credit cards that are able to pay them down without having to change their lifestyle much.
Then, there are people that have 15 + credit cards with large balances and depending on their income, paying off their credit cards can be a challenge. Sometimes they can be faced with reduced income and really have a difficult time just paying the minimum monthly payments. They would have to give up their everyday luxuries and extras that they have grown accustom to.
A budget/spending plan is a necessity and a road map to a new financial path. When you are creating your budget, both parties need to be on the same page and follow it. If only one person is taking it seriously the plan will not work. A budget reveals our fixed expenses, mortgage, car, and other loans. Then there are the flexible expenses, such as groceries, gas, eating out, leisure, and so on. We need to be honest with ourselves and put ALL of our expenses on paper revealing the true cost. Once that is done, figure in your net (actual) income that you are receiving monthly. Subtract your income from your expenses and see how much money you have left over to pay down those credit cards.
If you are coming up short or want to pay them down quicker, track your spending EVERY DAY. Every time you spend money, write it down on a note pad. Write down what the item is and how much it cost you. Do this for 3 – 4 weeks and you should get a good view of what you are spending too much money on.
Once your credit card debt is paid down, you will have a better understanding of living within or below your means and what your “new normal” has become.
Another positive is as you pay down those credit cards and not accrue new debt, your credit score will increase and you will be able to use your credit cards in the future more responsibly. The down side is, if you have an abundance of credit cards and pay them off, some will probably need to be closed. As you decrease your available credit, your score will go down. Credit cards are a great tool but you must use them responsibly. If you cannot, then credit cards may not be for you until you can be more self disciplined.
Please do not open a credit card account unless you are confident you will have it for a while. Before you open a new account, look into your future and try not to make a rash decision.
Written by Beth Mincks, Consumer Credit Counseling of the Ozarks
I would like to hear your comments & questions.