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Journalism of Courage
Credit cards have changed our lives and our spending habits because of their sheer convenience. However,there is a danger that credit cards can get you over your head. So it is important to ask certain questions: have you chosen the right card? Do you know the interest rate on your credit card? Did you stop to read the fine print? Do you depend on your card and spend the maximum credit limit? Do you buy impulsively and purchase things you dont really need? Have you been paying only the minimum or paying late?
Before even getting a credit card,question your need for one,and consider how healthy your financial practices are. Are you actually managing your finances,or do you swing from month to month on pure chance and luck? Nows the time to take control.
Treat your finances as if you were running a business. Review all incoming and outgoing to see if theres any expense you can actually cut back on that doesnt reduce the quality of your life. If you go the online way to pay bills,make sure to use a secure Internet connection. This might seem obvious at first,but credit card and banking fraud is on the rise,and it always pays to be that little bit more careful. Maintain,on a monthly basis,four totals: your debts,expenses,income and assets. Make sure you see these totals every day,and that you adjust them daily. The idea is to have them foremost in your mind so that you remember your goal. Seeing your debt total slowly decrease and your assets increase will motivate you to continue!
Try and remember these practices whenever you do opt for a card. Look for cards with a reasonable rate of interest stay away from the 0% cards unless you know for a fact that you can make your payments on time. Be wary of cards with high interest rates,large yearly membership fees and monthly maintenance as well always read the fine print. As difficult as it might be,try and restrict your credit usage to either only emergencies (which means you have an emergency fund in place),or for fixed,recurring expenses (groceries,petrol). And finally,when you do get your card,make sure to pay your balance in full every month,or stick as close to this effort as possible.
To get out of credit card debt,take a hard look at your finances and find out how much you can practically afford to pay each month. To get a firm grasp on where your money is actually going,you will need to track your daily spending for a month. Categorise your expenses by priority what you need,versus what you want. If you have more than one credit card (it is sensible to own only one),then arrange your credit card account statements by rate of interest,from highest to lowest,and sum up all your credit card debt balance.
Ideally,you should pay off entire amounts at one shot. However,if you cant pay off the entire balance,at least make a payment that is in excess of the minimum due. The minimum payment amount is simply the interest amount due on the principal. If you only pay the minimum you will never pay off the card. While youre doing this,try and stay away from using the card.
You could also apply for a low interest card and transfer debt from the card with the highest interest,and focus on paying off your cards,prioritising payment of the highest interest card.
If you have savings that you do not want to dip into to pay off the credit cards,look at what you are earning on your savings and what you are paying on the debt. Use your savings to get out of debt and know that you can always charge an emergency on your credit card. Take the interest charges you are not incurring every month and save that instead.
