The average American household carries almost $10,000 in credit
card debt. When this is added to the mortgage and auto loan
found in the typical home, the debt can become overwhelming. The
prospects of managing financial obligations have just gotten
worse, as Congress has passed legislation that will make
bankruptcy filings more difficult than ever.
In addition, the major credit card companies, at the urging of
the Federal government, have recently doubled their minimum
monthly payment to about 4% of the outstanding balance. For the
average family, that means an additional $200 per month that
must be paid for credit card debt and many families simply
cannot afford that extra money. If you are in such a
predicament, what can you do? Here are four tips that may help.
*Stop spending on things that aren't absolutely necessary. Each
individual will have to define what "necessary" means, but it
may mean taking a sack lunch to work, bringing your own coffee
instead of stopping at Starbucks, and canceling that
subscription to HBO. These things may seem small, and certainly
that mocha from the coffee shop isn't going to pay your credit
card bill, but these things add up. In total, they could amount
to several hundred dollars each and every month, and that could
help reduce your credit card bills. Every penny counts!
*Consider consolidating your debt, if possible. That means
moving debts from one account or more accounts with high
interest to an account with low interest. Many credit card
companies offer promotional, low interest rate deals if you
transfer a balance from another account. By moving balances from
an account with 20% interest to one with 10% interest, you could
save hundreds or even thousands of dollars per year. If
possible, you might consider a home equity loan or line of
credit, which allows you to borrow against the value of your
home. The bonus for doing this is that your interest is tax
deductible. Be careful, however. If you don't stop wasteful
spending and fail to pay the equity loan, you could be risking
losing your home!
*Find a reputable credit counselor. Soon to be required for
anyone filing for bankruptcy, credit counseling is business that
helps people become financially responsible. Credit counselors
will help you learn to manage money and can help you repay your
debts by working with your creditors to establish an affordable
repayment plan for you. The service isn't free, but the fees are
usually tailored to your ability to pay.
*File for bankruptcy - This should be the last resort, as a
bankruptcy filing will appear on your credit report for ten
years and can hurt you in your future attempts to buy a home or
a car. Nevertheless, the law does allow you, as a last resort,
to petition the courts to have your debts waived so that you can
obtain a fresh start. Be aware that new laws taking effect soon
will make it more difficult and expensive to have debts wiped
out through a bankruptcy filing. If you think this is the option
you should use, call an attorney now.
These four things should help most people get a rough idea of
how to manage their debt.
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
About the author:
Talbert Williams offers debt consolidation referrals and
advice. For more information, articles, news, tools and valuable
resources on debt solutions, visit this site:
http://www.1debtfreedom.com
