Sacrificing Your Future to Pay of Credit Card Debt
One of the fastest growing problems facing families today is rapidly growing credit card debt that is threatening to become a serious financial problem. For the majority of folks that are having this problem, they are financially stable and they pay their bills every month. Some are even very successful upper-middle class folks that are having a hard time wrangling in their credit card debt. The first instinct for many people in this situation is to raid the savings, or even the retirement fund at work to get out of this credit card situation. But sacrificing your future financial stability to pay off your credit card debt in one fell swoop now is never the answer. Let’s take a look at your options and the proper solutions to this common problem.
When you are making decent money and slowing climbing the corporate ladder, you tend to have a different set of rationalizations when it comes to spending your money. You most likely pay more than the minimums on your card and you are making more than enough money to live on, so you aren’t nearly as careful as you probably should be with your credit card usage. You believe that you’ll be making this amount of money, or even more, every month so why should you be careful? This attitude, while not entirely misguided, can lead to serious credit card debt that can endanger everything you’ve worked so hard for. The first place many people in this situation turn to is their 401(k) savings. They envision retirement to be decades away and a small withdrawal now won’t really have an impact on the future. But borrowing from your 401(k) or any retirement funds is never, ever a good move. While your financial future appears rosy at the moment, things can change in a heartbeat, and while you can’t imagine yourself being unemployed, it could happen and then that retirement savings is suddenly much more important.
So with your 401(k) and retirement savings off limits, how can you take a more pro-active approach to your credit card debt? The answer is to take a measured approach that will allow you to pay off your credit card debt over time. There are few times in life where a quick fix really is the answer, and when it comes to credit card debt, a long-term approach works much better.
The first step is to plan out a budget that shows your income and your expenses. If your financial situation is good, you should have no problem paying a little extra to your credit cards every month. The next step is to take your credit cards and put them somewhere where you are less likely to use them. The overwhelming majority of credit card purchases are impulse buys. If you don’t carry your cards on you, you will be significantly less likely to use them. If you have a lot of your debt spread out over multiple cards, you can start shopping for a consolidated card. But don’t take the first one you find, look around for a bit and see if you can find one with an excellent rate after the intro rate wears off. Getting out of debt isn’t any fun, but with the right approach, you can be in the black in no time flat.