Credit card debt is the enemy of financial success. Not all debt is created equal and there are no set standards as to what is considered too much debt. What is manageable for one may not be for another. If you want to succeed financially, you need to break the cycle of credit card debt.
To be fair, credit cards aren’t the problem. Nor am I suggesting that debt is bad. In fact, taking out a loan or using various types of financing is critical to starting or expanding a business. Even buying a home requires debt. What is critical is how we manage it.
Credit is inherently a good thing but racking up the credit card debt can get ugly quick. The first thing we need to do is change how we perceive credit cards. So from now on, instead of calling them credit cards (which sounds so harmless) we should call them ‘debt traps.’ This is similar to calling cigarettes ‘cancer sticks.’ Let’s call these things what they are.
Credit cards should be used with caution.
Credit cards, I mean debt traps, should be used with caution.My suggestion is that you become the credit card company’s worst customer. Their worst customer uses the card and pays off the balance each month. Do you like 0% interest? Well that’s what you’ll pay when you pay off the card each month. Do you know who is the credit card company’s BEST customer? It’s the person who racks up the debt and pays the minimum payment each month. The credit card company also loves it when you’re late because they can charge a late fee AND jack up your rate.
Develop a plan to tackle your credit card debt.
If you’re serious about long term financial success, the first thing you need to do is develop a plan to tackle your credit card debt. Be honest with yourself. If you can’t pay off the cards within 12 months given your current income, you’ll need to make some serious changes to your budget. If doing it within 12 months isn’t possible and you feel you’re in too deep, you may need credit counseling which can be away to help you develop a more comprehensive plan in dealing with the debt.
When your credit card debt is in the rear view mirror you can focus on building up your savings and retirement funds. Getting out from under credit card debt will allow you to devote more funds toward these goals and most importantly will give you peace of mind. Instead of making the credit card companies rich, make yourself rich. Credit card debt is the enemy. Its defeat can bring financial success.